Ethereum price fell below the $2,800 level after a sudden and sharp decline, deepening panic across the market and reinforcing the feeling that the bulls have lost control. The recent decline has pushed investors into a defensive mode, with some analysts now openly discussing the possibility of a broader bear market. Selling pressures have intensified across spot and derivatives markets, and volatility continues to rise as traders struggle to identify a reliable support area.
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A new CryptoQuant report from Darkfost highlights one of the most worrying developments: open interest for Ethereum on Binance has been steadily collapsing for more than three months. After reaching an all-time high of $12.6 billion on August 22, open interest has now been cut in half. Nearly $6.4 billion worth of derivatives positions have evaporated, bringing ETH’s open interest down to $6.2 billion, a sharp decline of 51%.
While this sounds like an unusual contraction, DarkFost notes that open interest has just fallen below the previous all-time high of $7.7 billion. This highlights how speculative and overworked the derivatives market has become in 2025 – and suggests that Ethereum may be going through a much deeper structuring process. Reset Than expected.
Speculation across exchanges is declining as Ethereum enters a deep reset phase
Darkfeast Confirms 2025 was the most speculative phase in Ethereum’s history, fueled by strong leverage, rapid flows, and a market structure that proved far less solid — and far less sustainable — than it appeared during the rally. The collapse of open interest on Binance is only part of the story.
The same pattern is unfolding across major derivatives platforms, revealing a broader structural dislocation rather than an exchange-specific phenomenon.
On Gate.io, ETH open interest fell from $5.2 billion to $3.5 billion. At PayBit, the decline was even steeper, falling from $6.1 billion to $2.3 billion. This simultaneous contraction shows how powerful it is to unwind speculative positions. Meanwhile, an ongoing correction pulled Ethereum’s price from $4,830 to $2,800, marking a sharp 43% decline from the highs.
This widespread decline in leverage indicates that the market is going through a deeper reset than the usual corrections. Investors are in no rush to re-enter their positions, especially as liquidations continue to pile up across exchanges.
While shrinking open interest impacts short-term momentum and sentiment, Darkvost notes that such aggressive deleveraging may ultimately help rebuild a healthier foundation for the market – one capable of supporting a permanent bottom for Ethereum.
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ETH loses major trend support with 3-day structure turning fully bearish
The 3-day chart of Ethereum shows a decisive breakout in the structure, with the price now firmly below the 50 SMA, 100 SMA and 200 SMA for the first time since late 2024. The rejection from the $3,600 to $3,800 area resulted in a strong push to the downside, sending ETH straight through all the major moving averages and confirming a shift towards a downtrend on a higher time frame. The current trading area around $2,800 reflects a decisive test of previous support, but momentum remains weak.
The 50 SMA has now crossed below the 100 SMA, while both are starting to converge down towards the 200 SMA – a configuration that typically precedes sustained corrections. Trading volume has risen on the red candles, showing that sellers are still dominant, and there is little evidence of aggressive buying on the dip. The final candle wick towards $2,700 highlights weakness rather than strength, suggesting that buyers are hesitant to defend this level with conviction.
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ETH is also forming a series of lower highs and lower lows, further confirming the bearish market structure. If the $2,750 area is broken cleanly, the next important liquidity areas are near $2,550 and $2,300, where previous consolidations developed earlier in the cycle.
Featured image from ChatGPT, chart from TradingView.com
