Ethereum is now in a correction phase after reaching a high of about $4,950 in late August, with open interest (OI) dropping more than 8% in the past week.
On the other hand, Binance’s futures market data suggests that the dip may be close to running out of steam, which could set the stage for the next rally.
Reading the Futures Market Tea Leaves
According to analysis shared by crypto researcher Burak Kesmeci, local bottoms for Ethereum have frequently been preceded by drops in Binance’s open interest. Over the last three months, an average OI drop of 14.9% on the hourly timeframe has corresponded with spot price corrections averaging 10.7%.
“Drops in OI have signaled spot price corrections ahead of time,” wrote the analyst.
He provided three precise examples: a 10.52% OI fall from 11.4 billion to 10.2 billion on August 17, a 25.38% crash from 13 billion to 9.7 billion on August 20, and an 8.69% decrease from 11.39 billion to 10.4 billion on September 13.
In each case, the reduction in open interest served as a leading indicator for upcoming spot market weakness. According to Kesmeci, the OI may need to ease down to about 9.69 billion to signal a full reset. This cooling of leveraged positions is not necessarily a bearish omen, but rather a needed market cleanse.
He concluded that while ETH’s spot price might see slightly more downside, the market is likely in the process of establishing a low, setting the stage for its next upward move.
“The futures side is almost ‘cooled off,’ and we may be looking at an ETH preparing for the next leg of the rally,” claimed Kesmeci.
His outlook comes at a time when ETH is trading at $4,487, down 0.8% over 24 hours but still holding onto a 3.9% gain for the week. While derivatives traders have reduced exposure, on-chain data shows the opposite trend: long-term holders are locking up tokens.
CryptoQuant reported previously that Ethereum staking deposits had risen to a record 36.2 million ETH, while exchange balances have dwindled to multi-year lows, showing that investors are reluctant to sell into weakness.
At the same time, U.S. spot ETFs now own 6.7 million ETH, which is almost twice as much as they did in April. This means that more companies want to buy ETH.
Road Ahead
Kesmeci’s short-term technical view exists alongside a divergence in fundamental perspectives. For instance, banking giant Citigroup has set a year-end 2025 price objective of $4,300 for Ethereum, a figure that appears conservative next to September’s record high near $4,955.
As noted by CryptoQuant analysts, the bank’s cautious position accounts for macroeconomic risks and potential regulatory challenges.
Over the past month, ETH has gained nearly 4%, while its yearly growth remains at 96%. Despite the correction, the asset is holding comfortably above its September low of $4,307 and sits only 9.3% below its all-time high reached on August 24.
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