Ethereum’s derivatives market experienced a sharp contraction amid heightened macroeconomic uncertainty. Data shows open interest fell from 7.79 million ETH to 5.8 million ETH across exchanges as traders rapidly closed leveraged positions. Analysts attribute this broad deleveraging to persistent inflation and geopolitical tensions. Despite the sell-off, technical analysis points to a hidden bullish divergence that could signal a long-term recovery toward the $4,800 level.
Ethereum’s derivatives market is shrinking fast as risk appetite fades under mounting macro pressure. On Feb. 28, market analyst Darkfost highlighted that open interest across exchanges fell significantly as traders reduced exposure.
Core PPI rose 0.8% month-over-month, pointing to sticky inflation. The Federal Reserve may delay rate cuts, keeping pressure on crypto markets.
The geopolitical issues between the United States and Iran also increased anxiety for investors over the weekend. Altcoins are more sensitive to tighter financial conditions, leading participants to close leveraged positions first.
Approximately 2 million ETH of the total reduction occurred on Binance alone. Notional open interest decreased once again due to the drop in prices, with Binance’s leverage falling from $12.6 billion to $4.1 billion.
Bybit, contributing 15% to the open interest, decreased to $1.9 billion, which is nearly one-third of its previous value. The sharp decline indicates a broad market shift away from leverage, not an issue isolated to one exchange.
Despite the derivatives drop, technical analysis indicates a different picture. On the same day, JAVON MARKS pointed out that Ethereum has a hidden bullish divergence on the 2-day chart.
The reason is that the price created a higher low during a larger correction, and the Relative Strength Index created a lower low. This formation can appear during a pullback in an uptrend, suggesting the long-term trend remains in place.
A genuine recovery may see the price move towards the all-time high level near $4,800. This would represent more than a 150% move from current levels.