ETH deleveraging is nearly over, so is a rebound getting closer? I don’t think the two are equivalent. Lighter positioning may indeed reduce the chain reaction pressure from forced liquidations, but it only tells us that the market’s leverage structure has changed. It doesn’t mean spot buyers have stepped in, much less guarantee that prices will rise soon. The real questions are: how much of the fragile positioning has this round of deleveraging cleared out, and are the remaining players willing to take on risk again?
According to a report by BlockBeats on October 25, 2026, Beijing time, CryptoQuant analyst Darkfost said that altcoins, and Ethereum in particular, had been broadly weak over the past three weeks. ETH fell about 15%, wiping roughly $54 billion off its market capitalization. In derivatives markets, open interest in ETH on Binance fell by about $1.3 billion over the month, a decline of nearly 20%, to around $5.7 billion; total open interest across the market was about $11.5 billion. The report also said Binance accounted for roughly 50% of ETH open interest. These figures show a marked contraction in positioning, but they alone cannot tell us whether selling pressure has ended.
A decline in open interest can reflect two different processes: falling prices triggering liquidations and forcing traders out, or participants voluntarily reducing their positions and lowering their leverage and risk exposure. Both result in fewer open contracts, but they mean different things. If the main effect is the clearing out of fragile positions, the market may be better able to withstand further volatility. If traders are still actively reducing positions, however, that suggests they are not yet willing to take on risk again. The report does not say how much each of these factors contributed, so I would not translate “deleveraging” directly into “bottoming out.”
Darkfost noted that open interest fell even more sharply in July, after which ETH staged a technical rebound of more than 32% and climbed back above $2,800. This offers a point of reference supporting the possibility of a rebound: after leverage declined, prices did rebound. But one historical move is not a roadmap for this time. At most, it shows that deleveraging and a rebound can occur in succession; it doesn’t prove the former caused the latter, or guarantee that the same pattern will play out again.
More importantly, the parties that benefit from changes in positioning and those that bear the costs are not the same. A contraction in leverage may reduce the risk of a liquidation cascade for those who still hold positions. Those who were liquidated or voluntarily exited have already taken losses, and a subsequent rebound may not make them whole. If spot demand hasn’t strengthened, a cleaner derivatives market may simply mean fewer sources of selling pressure, rather than the creation of new buying demand. Without evidence such as spot purchases or changes in trading volume and composition, derivatives indicators cannot be treated as proof of demand.
There’s also a counterpoint worth taking seriously: a decline in positioning doesn’t necessarily mean the risk has disappeared. The report says Binance still accounts for about half of ETH open interest, meaning positions on the platform remain a substantial share of the total. The report doesn’t explain how the remaining positions are distributed or how highly leveraged they are, so we can’t conclude from this alone that risk remains high. A more measured view is that the decline in total open interest is worth watching, but the total itself doesn’t tell us whether the remaining positions are fragile.
The same conclusion about deleveraging shouldn’t be applied to BTC. BTC has its own price and positioning structure; this report covers ETH derivatives data. Even if both assets are in the same market, changes in ETH open interest cannot be used to draw conclusions about BTC. Nor can price changes over a rolling 24-hour period prove that the news caused them: prices and positioning each answer different questions.
Next, I’ll be checking three things: whether ETH open interest continues to decline or stabilizes, whether spot demand picks up, and whether positioning quickly builds back up when prices recover. If positioning stabilizes and spot buying emerges and persists, that would lend more support to the idea that the risk structure has improved. If derivatives positioning keeps shrinking while spot demand remains weak, then the supposed rebound opportunity remains just an analyst’s view. Deleveraging can clear out some risk, but it won’t automatically find buyers for the market.
According to a report by BlockBeats on October 25, 2026, Beijing time, CryptoQuant analyst Darkfost said that altcoins, and Ethereum in particular, had been broadly weak over the past three weeks. ETH fell about 15%, wiping roughly $54 billion off its market capitalization. In derivatives markets, open interest in ETH on Binance fell by about $1.3 billion over the month, a decline of nearly 20%, to around $5.7 billion; total open interest across the market was about $11.5 billion. The report also said Binance accounted for roughly 50% of ETH open interest. These figures show a marked contraction in positioning, but they alone cannot tell us whether selling pressure has ended.
A decline in open interest can reflect two different processes: falling prices triggering liquidations and forcing traders out, or participants voluntarily reducing their positions and lowering their leverage and risk exposure. Both result in fewer open contracts, but they mean different things. If the main effect is the clearing out of fragile positions, the market may be better able to withstand further volatility. If traders are still actively reducing positions, however, that suggests they are not yet willing to take on risk again. The report does not say how much each of these factors contributed, so I would not translate “deleveraging” directly into “bottoming out.”
Darkfost noted that open interest fell even more sharply in July, after which ETH staged a technical rebound of more than 32% and climbed back above $2,800. This offers a point of reference supporting the possibility of a rebound: after leverage declined, prices did rebound. But one historical move is not a roadmap for this time. At most, it shows that deleveraging and a rebound can occur in succession; it doesn’t prove the former caused the latter, or guarantee that the same pattern will play out again.
More importantly, the parties that benefit from changes in positioning and those that bear the costs are not the same. A contraction in leverage may reduce the risk of a liquidation cascade for those who still hold positions. Those who were liquidated or voluntarily exited have already taken losses, and a subsequent rebound may not make them whole. If spot demand hasn’t strengthened, a cleaner derivatives market may simply mean fewer sources of selling pressure, rather than the creation of new buying demand. Without evidence such as spot purchases or changes in trading volume and composition, derivatives indicators cannot be treated as proof of demand.
There’s also a counterpoint worth taking seriously: a decline in positioning doesn’t necessarily mean the risk has disappeared. The report says Binance still accounts for about half of ETH open interest, meaning positions on the platform remain a substantial share of the total. The report doesn’t explain how the remaining positions are distributed or how highly leveraged they are, so we can’t conclude from this alone that risk remains high. A more measured view is that the decline in total open interest is worth watching, but the total itself doesn’t tell us whether the remaining positions are fragile.
The same conclusion about deleveraging shouldn’t be applied to BTC. BTC has its own price and positioning structure; this report covers ETH derivatives data. Even if both assets are in the same market, changes in ETH open interest cannot be used to draw conclusions about BTC. Nor can price changes over a rolling 24-hour period prove that the news caused them: prices and positioning each answer different questions.
Next, I’ll be checking three things: whether ETH open interest continues to decline or stabilizes, whether spot demand picks up, and whether positioning quickly builds back up when prices recover. If positioning stabilizes and spot buying emerges and persists, that would lend more support to the idea that the risk structure has improved. If derivatives positioning keeps shrinking while spot demand remains weak, then the supposed rebound opportunity remains just an analyst’s view. Deleveraging can clear out some risk, but it won’t automatically find buyers for the market.
