Ethereum's $15B OI Collapse and $1.1B ETF Outflows: A Flow Analysis

The most immediate pressure came from derivatives. Ether's open interest fell by more than $15 billion over the past seven days, a massive withdrawal of leveraged capital that amplified the price drop. This collapse in futures activity coincided with a sharp decline in the underlying spot price, which fell 30% to $1,900 from its recent high.

At the same time, institutional support evaporated. U.S. spot Bitcoin ETFs saw renewed net redemptions this week, removing a key source of buying pressure just as prices broke critical technical levels. This outflow dynamic mirrors the broader market, where US-based spot Ether ETFs have recorded $1.1 billion in net outflows in the past two weeks.

The sentiment in derivatives has remained bearish. Negative funding rates have largely been negative since the beginning of the month, signaling persistent short dominance and a lack of bullish positioning. This sustained bearish funding, combined with the massive OI drop, creates a volatile setup where further liquidations could drive prices lower.

Price Action: Breaking Key Levels and Testing Support

Ethereum broke decisively below the $2,000 psychological level for the first time since May 2025, falling to a nine-month low of $1,740. This sharp decline, a 30% drop over seven days, shattered key technical support and marked a major shift in market sentiment.

The immediate support zone now lies between $1,850 and $1,880. A daily close below this level risks a rapid move toward the next major liquidity zone at $1,600. The path to that level is clear, as it represents a significant historical support area where a large amount of ETH was previously acquired.

The next major support sits at $1,200, where approximately 1.5 million ETH were previously acquired. This level is a critical long-term floor; a break below it would signal the market has lost its last major buying interest and could open the door to deeper losses.

Catalysts and Risks: What to Watch Next

The immediate technical battle is for the $2,000 level. A daily close above $2,100 would invalidate the immediate bearish thesis and signal a potential reversal. Failure to hold this level risks a deeper correction.

The recovery to $2,036 may be a "dead cat bounce." Technical indicators show overbought conditions, with the Stoch RSI in the overbought territory above 90. This often precedes a local top and a resumption of the downtrend.

Sentiment has shifted sharply. The pullback pushed the Crypto Fear & Greed Index into "Extreme Fear," highlighting a major reset in trader psychology. This environment often precedes further volatility as the market digests the recent outflows and liquidations.