Ethereum Leverage Reaches Record Highs as ETH Trades Below $3,000, Raising Volatility Risks

Ethereum is trading below the critical $3,000 level, but below the surface market structure is becoming fragile. Derivatives data reveal a build-up of systemic risk, as leverage is climbing to historic levels while trader positioning becomes highly unstable. 

Record Leverage Signals Elevated Risk

The 7-day moving average of Ethereum's Estimated Leverage Ratio (ELR) on major derivatives venues has reached its highest point ever, according to on-chain data. 

The data shows that more than half of open interest now exists from investors who use leverage to back their positions instead of using actual capital. 

Historically, the market experiences higher volatility when ELR levels reach their highest, as even small price fluctuations result in investor liquidations.

The Taker Buy/Sell Ratio has shown extreme swings in recent days, collapsing to 0.86, its lowest level since September, signaling aggressive market selling before rebounding to 1.16, the strongest buy-side dominance seen since 2021. 

Fast changes show that traders use short positions to react to market movements instead of following long-term trends.

Price Structure 

Ethereum price started the week on a positive note, recovering 7.62% by Tuesday after a massive 14.22% correction in the last week. 

However, on 28th January, ETH failed to break the $3,017 resistance level and declined 6.25% the next day. At the time of writing, ETH is slipping below the key support at $2,750. 

If ETH closes below the $2,750 level, it could extend its decline towards $2,623. A close below this level could extend further losses toward the key psychological level at $2,000. 

Technical indicators such as RSI and MACD on the daily chart are showing a strong bearish bias. 

A decisive reclaim of the $3,000-$3,200 resistance zone is required for bullish bias to return. Until one of these levels breaks, price compression is likely to persist.

CoinGlass data shows heavy deleveraging. Open interest fell 10.9% to $34.6 billion despite volume jumping nearly 59%, indicating position unwinds, not fresh leverage. 

Long liquidations dominated ($394.7 million vs $26.8 million shorts in 24h). The OI-weighted funding rate at 0.0016% signals near-neutral positioning; leverage has reset, but directional conviction remains weak.

Also Read: Ethereum in 2026: Trouble Ahead or Legendary Rebound Incoming?

Long-Term Holders Continue Accumulating

Despite short-term volatility, large holders are consistently acquiring more assets. The recent weeks have seen an increase in whale balances, while more than 175 million Ethereum addresses now hold active balances, indicating network usage remains steady.

The current staking activity continues to take ETH out of the liquid supply, leading to a decline in immediate sell-side pressure.