Ethereum Consolidation Signals $4,200 Target Amid 50% Open Interest Drop

• Ethereum is consolidating within a contracting triangle, testing key resistance near $3,200.
• Open Interest has dropped ~50% since August, signaling lower market risk but setting up for potential volatility.
• A breakout above $3,200–$3,250 could target $4,200, while a breakdown below $2,900 may expose ETH to $2,500.

Ethereum (ETH) has been consolidating since late November, forming a clear contracting triangle. The $2,990 area currently acts as the pivot, while repeated rejections at the 200-day EMA near $3,410 confirm persistent resistance.

According to Dami-Defi, the recent structure suggests that as long as higher lows around $2,900 hold, the uptrend remains technically intact. A decisive daily close above the triangle top near $3,200–$3,250 and the 200-EMA would confirm a potential reversal, targeting $4,200.

Looking at the charts for a bigger picture of what could be developing in the markets, it is indicated by the daily chart that a bigger correction from when markets peaked earlier this year could be underway.

Source: X

Prices are converging into a more defined compression zone, with volatility dropping steadily. Seller pressure continues to print lower highs just near the trend line, while buyers start joining at higher points of support from the November lows.

Ethereum Open Interest Drops 50% Since August

Open interest for Ethereum has declined by a substantial 50% since August, based on data from Alphractal. Despite a possible relief rally, it seems that fewer leveraged positions are taken by institutions and large traders for ETH.

Source: X

Current data for on-exchange holding of ETH is as follows: Binance: $7.64B (31%), Gateio: $3.72B (15%), HTX: $3.12B (12.65%), Bybit: $2. This is a deleverage situation. This is an indication of a safe market.

It means that the likelihood of rapid and drastic market shifts is lower since there is minimal speculative buying or selling. However, this typically is an indicator of drastic market changes soon. Traders must determine on which side of the triangle the break will happen.

Source: X

ETH Coiling Above Key Support at $2,600

Merlijn the Trader thinks that ETH is ready to move upwards and start a push. To keep the uptrend on track, it must remain above $2,600; the initial target for the rally could be around $3,100, and afterwards it could move to $3,400.

However, if ETH convincingly breaks through the $3,200-$3,250 level, it may target $3,800-$4,200, perhaps changing the overall trend. On the flip side, a break below the rising support line could cause a move to the mid-$2,500s, around the next large historical demand zone.

Also Read: Ethereum Selling Pressure Builds as Arthur Hayes Shifts $2M Into DeFi Tokens