Ethereum is below the $4,000 level for the first time since early August, showing a major shift in market sentiment. After weeks of strong performance, ETH has lost nearly 20% of its value since September 13th, with many traders worried about their next move. While broader market corrections have driven uncertainty, some analysts argue that this is a reset that needs to be able to prepare evidence for new growth.
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Top analyst DarkFost emphasizes that Ethereum’s open interest is experiencing one of the biggest resets. He points out that after a long period of bullish momentum, excessive leverage was punished, leading to sharp contractions in position. This decline is particularly visible in Binance, where many of the recent ETH trading activities are underway.
The drop in prices and emotions appears negative, but analysts see a potential positive in this reset. In many cases, a decline in open interest reduces the risk of a cascade of liquidation and allows the market to stabilize. For Ethereum, this moment may serve as a key test of his ability to retain a strong level of support and set the stage for his next move once bullish momentum has returned.
Ethereum’s open interest reset marks a turning point
DarkFost explains that recent changes in Ethereum’s open interest are not only important, but they are one of the sharpest resets observed since its inception in 2024. Historically, such a reset follows a period in which excessive leverage pushes open interest to unsustainable levels, as in recent weeks of ETH. Cryptocurrency attracted most of the market attention supported by ETF enthusiasm and strong accumulation patterns.
As liquidation accumulates and open interest falls, immediate sales pressure often begins to ease. This tends to create conditions that allow the market to stabilize and in some cases prepare for a recovery. Dynamics can be seen as a “cleansing” effect, washing away excessively expanded traders and bringing balance back to market structure.
In detail, Binance recorded its sharpest monthly average decline each month, sweeping over $3 billion in public interest on September 23rd, followed by an additional $1 billion yesterday. BYBIT also faces a cut of $1.2 billion, with OKX down about $580 million. These diagrams highlight the magnitude of resets across major derivative platforms.
This contraction reflects a broader market reset, unlocking dangerous, over-levered environments. For Ethereum, it may mark the beginning of a healthier stage. There, lower speculative pressures allow organic demand and foundations to play a stronger role in shaping the next trend.
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Price Action Insights: Key Levels of Testing
Ethereum (ETH) is trading at nearly $3,939, dropping sharply above 5% in the latest session, extending the revision after early September exceeding $4,700. This drop marks a rise in sales pressure, as ETH fell below the $4,000 psychological level for the first time since August.
The chart shows that the ETH has broken after forming a double-top pattern around the $4,700 to $4,800 range. This is a classic bear signal that suggests upward momentum fatigue. Rejection from this zone brought ETH closer to its 50-day moving average (blue). This previously served as a strong support during the rally. The decisive closure under this line allows the door to a deeper boost towards the 200-day moving average (red) and is currently located near $3,100-3,200.
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Despite current weaknesses, ETH is on a broader upward trend, as seen at close to $2,200 from its July low. That rebound establishes a strong bullish structure, and as long as ETH is beyond the $3,500-$3,600 region, the long-term outlook remains constructive. For now, the Bulls will need to regain $4,200 to regain momentum, but if they can’t keep up to the current level, sales pressure will be accelerated in upcoming sessions and test for deeper support.
Dall-E special images, TradingView chart