Ethereum Open Interest Surges 4% Amid Price Drop, Liquidations Hit $158M

The cryptocurrency market opened the new month with a significant downturn, as both Bitcoin and Ethereum registered losses exceeding 5% over a 24-hour period. For Ethereum, this decline erased the recovery it had staged in the final week of November, pushing the price back to the low $2,800 range. This sudden bearish move had an immediate and severe impact on the derivatives market, where leveraged positions were forcefully closed. According to data from CoinGlass, the total value of Ethereum-related liquidations across exchanges reached $158 million.

A deeper look at the liquidation heatmap reveals the one-sided nature of the sell-off. Of the $158 million total, a staggering $140 million—or approximately 89%—came from long positions that were betting on a price increase. This mass unwinding of bullish bets was the primary driver behind the initial collapse in Ethereum Open Interest, a key metric tracked by analysts like CryptoQuant’s Maartunn. Open Interest measures the total value of all open derivative contracts for an asset, and its sharp drop mirrored the price decline as these long positions were flushed from the system.

Despite the wave of liquidations and the negative price action, derivatives traders demonstrated a swift and notable change in sentiment. As highlighted by Maartunn in a recent analysis, the Ethereum Open Interest did not remain depressed. Once ETH’s price descent slowed and began moving sideways, the metric sharply reversed course. In the period following the dip, Open Interest surged by approximately $654 million, representing a 4.3% increase from its low point.

This rebound indicates that speculators quickly returned to the market to open fresh positions, even as the asset traded at lower levels. “Looks like the gamblers are back for another round,” Maartunn noted, capturing the resilient—and potentially risky—speculative appetite in the ETH derivatives market. The rapid recovery in Open Interest suggests that traders view the price drop not as a prolonged bearish signal, but as a new opportunity to establish leveraged bets, setting the stage for the next phase of price discovery.

The concurrent rise in Open Interest and recent history of liquidations points to a critical market dynamic: the prevalence of high leverage. Historically, elevated Open Interest levels are correlated with increased price volatility for cryptocurrencies like Ethereum. This relationship exists because a high value of open positions typically implies a significant amount of leverage is deployed in the market.

In such an environment, even a moderate price swing can trigger a disproportionate number of liquidations. These forced closures then act as a feedback loop, intensifying the initial price move. The market witnessed this mechanism in real-time during the recent decline, where the initial sell-off sparked liquidations that, in turn, fueled further selling pressure. With Open Interest now climbing again, the market’s leverage footprint is expanding anew. The critical question for traders and analysts is whether this rebuilt speculative positioning will become the fuel for the next bout of significant volatility, continuing the cycle of sharp moves and cascading liquidations that has come to characterize crypto derivatives trading.