Ethereum’s open interest on Binance continues to decline sharply, erasing more than half of its positions over the past three months. Since the crash on October 11, ETH open interest has struggled to recover, reflecting a broader deleveraging process across major exchanges. On Binance alone, nearly $6.4 billion in positions have vanished, highlighting the unwinding of Ethereum’s most speculative trading period in history.
The surge in speculative activity earlier this year had pushed ETH open interest on Binance to a peak of $12.6 billion in August. This rally was fueled by strong interest in Ethereum ETFs, growth in the layer-2 ecosystem, and ongoing recovery across DeFi, staking, lending, and stablecoin markets. Despite these drivers, Ethereum failed to sustain a breakout to higher market ranges, leading to a brief altcoin season rather than a sustained rally.
As Ethereum’s bullish structure became increasingly fragile, traders shifted to spot trading to compensate for weakening derivative activity. However, this strategy failed to maintain higher market prices. Open interest also contracted on other exchanges, with Gate dropping to $3.5 billion, Bybit declining to $2.3 billion from $6.1 billion, and Hyperliquid falling to $1.3 billion. Overall, total ETH positions across major platforms fell to $15 billion, with a balanced mix of long and short positions.
The decline in open interest coincided with a 43% drop in Ethereum’s price, from a high of $4,830 to around $2,800. ETH now trades at 0.032 BTC, leaving its previous higher range behind. November closed with a 22.2% loss for Ethereum, marking the second-weakest month since February, when ETH fell 32.2%. Year-to-date, Ethereum has only seen three months of gains, reflecting short-term, unsustainable rallies amid heightened speculative activity.
Despite these price pressures, the broader DeFi ecosystem remains relatively healthy, with most loans carrying lower liquidation thresholds. Centralized market liquidations have discouraged aggressive long positions, while subdued derivative activity has reduced the probability of a short squeeze. Ethereum’s fear and greed index currently sits at 27 points, signaling investor fear and caution in the market.
Looking ahead, the decline in ETH open interest may signal a recalibration of expectations among traders and investors. While short-term volatility persists, Ethereum’s ongoing adoption in DeFi, layer-2 solutions, and institutional tokenization initiatives suggest the network retains long-term relevance. The market reset could ultimately lay the foundation for a more stable and sustainable growth phase for ETH.
