The recent market movements have seen a significant drop in Open Interest for both Ethereum (ETH) and Bitcoin (BTC) Futures. Over the last two days, ETH Open Interest plummeted by almost $10 billion, while BTC shed over $5 billion. This sudden drawdown erased weeks of gradual accumulation in the Futures market.
The sharp decline in Open Interest indicates a mass unwinding of leveraged positions, likely triggered by cascading liquidations and panic exits. This trend has been particularly evident in the ETH/BTC ratio, which broke lower after a strong rally in July, slipping from 0.0325 to 0.0307.
In terms of Funding Rates, Ethereum and Bitcoin saw a brief period of negative rates on Binance, signaling heavy bearish pressure. However, as of August 2nd, Funding Rates have stabilized across exchanges. Aggregated BTC funding has recovered to +0.0042, while ETH has climbed back to +0.0063. This rebound suggests that bearish momentum may be subsiding, paving the way for a potential market rebalancing or even a short squeeze.
The Liquidation Heatmaps for BTC and ETH show that leveraged long positions were wiped out en masse during the recent price slide. Bright yellow bands cluster around $117K for BTC and $3600 for ETH on August 2nd, indicating where longs got trapped before liquidations accelerated the drawdown. These levels may now act as resistance, both technically and psychologically.
With price action consolidating below these levels, they could pose as barriers to further upside momentum. However, the absence of heavy liquidation bands below current prices suggests that the worst of the deleveraging may be over. Any potential upside recovery is likely to face resistance near the previously liquidated zones, which have now turned into psychological barriers for traders.