Ethereum’s Momentum Weakens While Open Interest Remains Steady: Insights from Binance Data

Ethereum’s Momentum Weakens While Open Interest Remains Steady: Insights from Binance Data

Summary:
Ethereum has recently climbed back to the $3,150 mark after a turbulent trading session on Sunday, but analysts have mixed opinions on what comes next. While some see this price bounce as a short-lived recovery before a continued decline, others believe it could signal the start of a bullish reversal. New data from Binance suggests that while price momentum is fading, open interest remains high, indicating a potential market transition.

Key Takeaways:

Ethereum's price recently bounced back to $3,150 after significant volatility, with divided opinions among analysts regarding its future direction.
The open interest in Ethereum is stable, reflecting traders holding positions rather than aggressively decreasing or increasing them.
Current market behavior suggests a repositioning phase without extreme leverage or panic-induced liquidations.
The potential for a rebound or further decline depends on upcoming momentum in both the spot and futures markets.

Open Interest Stability Indicates Market Transition

According to a recent report from the Arab Chain on CryptoQuant, Ethereum's open interest stands at an impressive $6.61 billion, showing that traders are managing a substantial number of their positions despite a sharp drop from $3,900 to below $3,200. This situation—where the price declines while open interest remains steady—suggests a market repositioning phase, indicating that traders are reducing their activity rather than exiting entirely.

Supporting this perspective, the 30-day average open interest (OI avg30) sits at $6.44 billion, with a standard deviation (OI std30) of $329 million. These metrics highlight that price fluctuations are operating within normal volatility ranges, with no evident signs of aggressive position building or liquidation.

Binance Ethereum Open Interest Z-Score | Source: CryptoQuant

With a Z-Score at 0.50, the slight increase in open interest does not indicate a strong bearish sentiment. Instead, it suggests that traders are actively engaging with the market while selectively building new positions during price declines. This participation level is crucial, signaling an active derivatives market that is not overheated.

Ethereum's current price weakness is a result of waning momentum after failing to hold onto previous highs, placing the market at a pivotal point. If large traders are predominantly short, stable open interest could further reinforce downward pressure. Conversely, if long positions prevail, this same stability might lay the foundation for a rebound once momentum shifts positively.

Assessing Momentum as Bulls Seek to Regain Control

Ethereum is currently trying to stabilize between $3,150 and $3,160 after several weeks of volatility. The price has bounced back from a local low near $2,750, forming a short-term rising trend. However, momentum remains fragile. The 50-day Simple Moving Average (SMA) continues to decline and remains significantly above the current price, highlighting the prevailing downtrend. Until Ethereum can break through and close above this moving average, any upward attempts may encounter significant resistance.

ETH Consolidates Around Key Level | Source: ETHUSDT chart on TradingView

The 100-day SMA is also on a downward trajectory, converging with the $3,350 to $3,400 range—an area likely to be a significant barrier for any bullish continuation. Meanwhile, the 200-day SMA remains flat, positioned slightly above the price level, creating additional resistance around the $3,250 to $3,300 zone. This collection of resistance points confirms that despite the recent price bounce, Ethereum is still in a corrective phase.

Volume has significantly decreased compared to the notable selling pressure experienced in November, suggesting that any price rebound may be driven more by diminishing selling pressure rather than strong buyer demand. If trading volume remains weak, Ethereum may struggle to gain the necessary momentum for a sustained recovery.

Featured image from ChatGPT, chart from TradingView.com