Ethereum lost key Fibonacci level, and open interest fell to $11.5 billion

Key Points

ETH encountered resistance around US$1,930 and fell below the 0.382 Fibonacci retracement level during the pullback. Prices are currently testing an area that previously suppressed ETH for nearly 10 days before the breakthrough. Positions have retreated from above $15 billion to about $11.5 billion, indicating that derivatives exposure is shrinking. The funding rate is still positive, making the remaining long positions account for a high proportion. Derivatives positions provide an important reference: a significant contraction in positions suggests that traders are reducing exposure, but funding rates remain positive. The market's leverage ratio is lower than at the recent peak of open positions, but unclosed positions are still tilted in a bullish direction.

Front resistance level becomes key decision-making area

The reason why the support level currently being tested is more important than the pure Fibonacci level is that ETH has previously been running below it for a long time. Shorts controlled the area for nearly 10 days before buyers finally pushed for a breakthrough. A successful step-back test will show that the supply in the front resistance zone has been digested. ETH then needed to recover the 0.382 Fibonacci position before it could try again to challenge the $1,930 challenge. If it fails, it means that the breakthrough has not formed a solid support. In this case, the 50-day moving average and the 0.236 Fibonacci retracement level will become the next major area for buyers to defend. The daily closing price is more important than a brief intraday break below this level. A recovery after a temporary dip will remain structurally intact, while closing below the support level and failing to step back will provide stronger evidence for the trend to break.

Funding rates and positions are explained separately

According to data, Ethereum positions on all exchanges rose above US$15 billion in the middle of the recent 90-day cycle, and then fell back to approximately US$11.5 billion. The contraction suggests traders are closing positions rather than significantly increasing new derivatives exposure. Therefore, the market is in the stage of risk removal after accumulation in the early stage. Falling positions reduce the amount of leverage available to trigger a new wave of liquidations. This does not eliminate downside risks, but means that the current pullback is not accompanied by a radical expansion of positions. Funding rates provide another side of information. Most of the readings in the last 30 data points were positive, with recent values ranging from 0.004 to 0.011. Long traders are still paying fees to short sellers, indicating that overall positions in perpetual contracts remain bullish. Occasionally negative values suggest that market sentiment may quickly reverse, but the current portfolio is one of shrinking total derivatives exposure, while remaining positions are still biased towards long positions. This is less crowded than a situation where open positions rise and funding rates are strongly positive. The remaining risk is that if support falls, traders leaning towards the long could be forced to further reduce exposure. If ETH holds support and holds positions stabilize or begins to gradually recover, such a rebound will be more convincing. Prices rebounded while positions continued to fall, indicating a lack of widespread derivatives participation in this round of gains.

What derivatives data need to show

The chart has identified key support and resistance levels. Derivatives data can reveal whether the next round of trends has enough participation to continue.

Strong recovery: ETH holds the breakthrough area and positions increase or stabilize. Positive funding rates remain constructive provided that the risk of overcrowding of long positions is avoided.

Weak recovery: Prices rebounded, but positions fell, indicating that the rally was driven by short covering or closing positions rather than real new exposure.

Increased downside risks: ETH loses key support and the funding rate remains positive, making long-leaning traders extremely vulnerable to the risk of possible chain cuts.

Open positions have dropped significantly from recent peaks, so the overall market leverage ratio has decreased. The next signal is whether traders will start rebuilding exposure after support is confirmed or will continue to withdraw from derivatives markets.