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Following a significant rebound in the market, a large Ethereum perpetual contract at a size of $16 million has passed from a losing position to a winning position, creating a monumental moment for derivatives traders.
According to data from Binance, the position was opened at $3,392 with a liquidation point near $3,364. Before the latest spike, the contract was still losing close to $1.2 million at one point, but is now producing an unrealized gain of $1.05 million.
This quick flip indicates renewed market conviction in Ethereum. The price of ETH above $3600 brought back conditional bullish sentiment for traders across derivatives when volatility had been abundant for several weeks.
This momentum shifted bullish sentiment, indicating a strong appetite for risk among leveraged traders who have been moderately entering the market after extreme liquidation. After several weeks of prices going down across platforms, many traders are feeling confident enough that prices and open interest are increasing at the same time.
Yet, the key question remains: Can Ethereum sustain its recovery momentum and turn this short-term gain into a lasting trend?
The profit swing stems from several interconnected market forces. Earlier in the week, forced liquidations on overleveraged longs drove Ethereum lower, tightening liquidity across exchanges. Traders absorbed heavy losses as liquidation volumes spiked.
Following the correction, speculative optimism returned. Renewed liquidity expectations and shifting interest rate forecasts sparked inflows into digital assets. These macro factors encouraged traders to reestablish long positions. Consequently, open interest surged across major exchanges, and call-option demand expanded - a sign of increasing bullish bets on Ethereum’s upside.
From a structural standpoint, the move underscores the balancing act between opportunity and risk. While traders saw quick profits, overbought conditions suggest short-term caution may still be necessary. Technical signals show stretched levels, even as broader market sentiment trends upward.
Ethereum’s price dynamics reveal a strong correlation between spot movement and open interest, both signaling active market participation. Over the past month, ETH traded between $2,800 and $4,400, while open interest fluctuated between $16 billion and $24 billion.
In mid-October, open interest held near $22 billion as ETH hovered around $3,800. After October 14, liquidation pressures caused declines, but a rally between October 25 - 27 lifted ETH to $4,400, pushing open interest beyond $24 billion. Early November then brought a drop below $3,000, before the token rebounded near $3,600, showing a steady rise in leveraged participation.
From a technical standpoint, Ethereum is showing a strong corrective A-B-C wave on the three-day Kraken chart with a target upside objective with the upside toward the high end of the projected price objectives at $16,528. Resistance levels based on Fibonacci retracement show strong levels at $6,713 and $10,851, with notable support levels at $2,530. On the chart, there is also an inverse head-and-shoulders formation, indicating that the bullish leg will likely continue.
Several indicators are suggesting a strong lack of bullish sentiment with several components of inventory accumulation, including the stochastic oscillator, which is a momentum indicator, while the relative strength index is coming off of an oversold position but climbing now toward a neutral position where it lacks overbought momentum and could “reset” for accumulating or acquiring ETH.
The visible range volume profile also shows purchasing and price accumulation around the $2200 price level and the top of the visible range at $3000, with lighter resistance at the $4200 price mark, which indicates there could be some price to price action above that could lean bullish if the price momentum there stays intact.
Ethereum’s derivatives market reflects renewed optimism as a $16 million long position flips to profit amid a strong rebound. Rising open interest, bullish technical indicators, and expanding price action above $3,600 show a growing appetite for risk and potential continuation toward higher targets.
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