Ethereum's derivatives market flashed a severe warning signal Tuesday as traders rapidly closed over $2 billion in futures positions, threatening a potential 10% correction below crucial support levels. The massive unwind slashed total ETH open interest to $12.4 billion, with Coinalyze data revealing 34% of remaining positions are now short-biased and Binance showing the most negative funding rates at 0.0058% - clear indicators of mounting bearish pressure. Despite holding above $2,300, the collapse in trading activity and neutral 53-point Fear & Greed Index reading suggest Ethereum is losing momentum at a critical technical juncture.

Why is ETH deleveraging? 

According to Cryptoquant contributor Amr Taha, ETH is going through the second capitulation event for the past 30 days. In March, ETH derivative trading also lost $2B in open interest. The closed positions were small compared to previous record events, but signaled the ongoing weak sentiment. 

The reason for the rapid outflow of open interest is the closing of positions on Binance and Gate. The two exchanges led the decline, with most of the deleveraging happening on the Gate exchange. 

The Gate market operator carried $4.67B in open interest as of April 14, now down to $2.88B. Most of the leverage was lost in a one-week period. A part of the deleveraging coincided with the Kelp DAO hack. As Cryptopolitan reported recently, some of the Kelp DAO funds are being mixed, with up to $210M in ETH potentially awaiting liquidation. 

On-chain data also shows whales are closing some of their derivative positions, taking profits after the recent ETH consolidation above $2,300. The open interest has been slow to regenerate since October 10, 2025, and traders are eager to close positions with a reasonable profit, instead of awaiting bigger price moves. 

The recent deleveraging is also happening on Hyperliquid, where ETH perpetual futures carry around $435M in open interest. The two leading whales hold matching short and long positions for 20,000 ETH. The whale going short is currently carrying over $8M in unrealized losses, while paying $76K in funding. The leading long position is carrying over $376K un unrealized gains. 

Are whales still interested in ETH?

Despite the outflows on derivative markets, spot accumulation continues for ETH. The token is still in demand for passive staking, as well as DeFi collateral.

In the past 30 days, DeFi slowed down and showed significant outflows, but Ethereum remains the key venue for lending and DEX trading. Holding ETH tokens is still key as more entities make deposits to the Beacon Chain contract. Over 2.7M ETH are awaiting deposit for long-term staking. 

Recent data on whale activity, aggregated by Cryptoquant, shows that structural accumulator wallets are the most active in the current market. Over 2.43K wallets are buying up ETH tokens on the spot market. Spot markets are not a replacement for directional futures trades, but may signal a long-term confidence in the importance of ETH as a utility asset. 

The ETH market is largely moved by whale activity and sentiment, as retail traders are mostly selling their holdings. Whales are currently holding ETH with a small profit, and have not shown signs of capitulation even when their holdings were underwater. Whales with over 100K ETH are in the green and may support the market. 

Historically, whales and large-scale holders are trading strategically and taking profits, instead of holding for the long term. The health of DeFi and general interest in on-chain activity may boost ETH and rebuild its bullish sentiment.

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