Market Direction

ETH drops 16% in liquidation event

Published: Feb 4, 2025

Ethereum’s open interest plunged 16% in a major liquidation event. ETH struggles to hold $2,600 support, while traders face market indecision with fluctuating funding rates and uncertain breakout potential.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

ETH's Open Interest plummeted over the last 48 hours, showing that this was a large leverage washout event.
ETH's Open Interest (by number of coins) fell by 16%.
ETH's Funding Rate was very negative on Monday, but it has now returned to slightly positive. However, funding keeps flip-flopping between positive and negative, showing indecision among traders, who are most likely being chopped up.

ETH's open interest (by number of coins): 3. Ethereum futures open interest chart displaying ETH price movements and open interest trends, highlighting leverage wipeout and market indecision.

3. Ethereum futures open interest chart displaying ETH price movements and open interest trends, highlighting leverage wipeout and market indecision.

Technical analysis

ETH rejected into the horizontal resistance of $3,480. A failed breakout then sent the price to $3,280, which also couldn't hold.
The capitulation event sent ETH well below the next horizontal support of $2,420, but the price has recovered and is now trying to stabilise around the Yellow Box - which has now been filled, as we called for.
$2,600 is the next horizontal support, whilst $2,875 is the next horizontal resistance.
ETH's RSI is close to being oversold, and it remains well below its moving average.

4. Ethereum price chart with key support and resistance levels, RSI indicators, and trendlines showing ETH's struggle post-liquidation event.

Next Support: $2,600
Next Resistance: $3,050
Direction: Bearish/Neutral
Upside Target $3,050
Downside Target: $2,400

Cryptonary's take

We'd expect the price to take some time to establish a new range here, likely between $2,600 and $3,050. Whilst the price remains in the downtrend, we'd expect it to be range-bound, and therefore, we're not expecting any major breakouts anytime soon. If the price were to revisit the $2,300's, that might be worth a bounce play. But, other than that, we're not too interested in ETH at this moment in terms of trading opportunities.