Ether (ETH) remains under pressure after failing to reclaim the $2,150 resistance level. Despite the decline, ETH’s aggregate open interest has increased by roughly 350,000 ETH, suggesting new short positions are entering the market.
With more than $1.5 billion in bearish positions clustered above $2,150, a successful defense of the $2,000 support zone could trigger a sharp short squeeze and a relief rally for ETH.
Overcrowded ETH trade may lead to a relief rally
ETH has failed to reclaim $2,150 after dropping below it on May 17. The resistance capped the price from February to April, limiting a strong breakout.
With the price consolidating near $2,000, crypto trader Ardi said,
“Sub-$2,000 is coming for ETH shortly. We’ve already seen a -20% correction from the range highs, and price is now completely outside the ascending channel.”
ETH/USD, one-day chart analysis by Ardi. Source: X
ETH futures data indicate a more nuanced setup during the current dip. Aggregated open interest has climbed by roughly 350,000 ETH over the past day, even as the price trended lower to $2,060. The divergence between price and OI suggests fresh short positions, rather than long liquidations, which is driving the price lower.
Aggregated funding rates remained strongly positive at 0.0049% this month, showing traders still paying to maintain long exposure despite falling prices. The combination of rising open interest and positive funding implies aggressive positioning on both sides for the time being.
ETH price, funding rate and open interest. Source: Velo chart
This could create a liquidity hunt on both sides. $2,000 stands out as the nearest pivot zone. The long-leveraged positions-at-risk data exceed $1 billion, making it a critical level for short-term direction.
That setup leaves ETH open to a potential short squeeze. A successful defense of $2,000 could force shorts covering into the liquidity pocket above $2,150, where more than $2.1 billion in short-term liquidity is concentrated, leading to a relief rally.
ETH liquidation map. Source: CoinGlass
Related: Tom Lee predicts supercycle amid Bitmine’s largest Ethereum buy in 2026
ETH retail participation keeps shrinking
Ether has steadily lost participation from mid-sized holders since 2023, reflecting weak conviction among the retail investors. Wallets holding between 100 and 1,000 ETH controlled roughly 16.2 million ETH during the 2023 peak, but that figure has since dropped to around 8.75 million ETH.
Ether balance by holder value. Source: CryptoQuant
Meanwhile, larger investors played a key role in Ethereum’s 2024 rally. Holdings among addresses with 1,000–10,000 ETH rose to 15.8 million from 12.4 million ETH before distribution began in October 2025. As of May 25, balances in this cohort had fallen back to 12.7 million ETH, indicating reduced exposure after the rally.
However, Ether’s largest holders continue to accumulate aggressively. ETH wallets holding between 10,000 and 100,000 ETH increased their balances by nearly 30% over the past year, rising to 19 million ETH from 14.7 million ETH. The trend suggests that mega-whales continue absorbing ETH supply even as participation from mid-sized holders declines.
Related: Ethereum bull David Hoffman explains why he sold his ETH