Ethereum Leverage Capital Hits Lowest Level Since March Amid Consolidation
Ethereum's price remains range-bound as leverage capital continues to dwindle. The total value of outstanding contracts in Ethereum derivatives, known as open interest, has reached its lowest level since March at 12.49 million ETH. Despite a three-month price recovery, open interest has actually dropped by 1.46 million ETH since early July.
Perpetual traders are leaning negative, with the Taker Buy Sell Ratio hovering in negative territory since last week. This indicates that traders are closing positions to take profits, while demand is fading. However, analysts at Bitfinex suggest that the decline in open interest could support price action, as it has historically done.
The drop in OI comes alongside contracting futures premiums and a single-day OI drop of 16,075 BTC on Monday, which was the CME's third-largest daily decline on record. This contraction has led to elevated settlement ratios paired with compressed carry, which have historically preceded a median 30-day gain of 8.9 percent in BTC.
However, analysts also point out that low leverage limits the scope for a price decline to accelerate through liquidations, but it does not create a buyer. The buyer must come from the spot market. US spot ETH exchange-traded funds (ETFs) broke their seven-day inflow streak on Tuesday, after recording minor net outflows of $2.8 million.
Ethereum has seen $56.8 million in liquidations over the past 24 hours, led by $32 million in long liquidations. The daily chart shows that ETH maintains a bullish bias as it holds above all key Exponential Moving Averages (EMAs). Momentum remains constructive, with the 14-day Relative Strength Index (RSI) sitting near 62 and the Stochastic Oscillator (Stoch) around 67.