ETH open interest falls to 3-year low: What does it mean for Ether price?

💡 DMK Insight

Ether’s open interest is dropping, and that’s a big deal for traders right now. A decline in open interest often signals that traders are closing out positions, which can lead to less liquidity and increased volatility. If bearish positions are being squeezed, we could see a rapid price increase, potentially targeting that $2,500 level. This aligns with the current futures funding rates, which are also showing signs of bearish sentiment. If the funding rates remain low, it could entice more short positions, setting the stage for a classic short squeeze. But here’s the flip side: if the market doesn’t rally as expected, those short positions could quickly turn into a trap, leading to further declines. Traders should keep an eye on the $2,000 support level; a break below that could negate the bullish thesis and trigger more selling pressure. Watch for volume spikes around key resistance levels as a signal of potential momentum shifts.