Ethereum Classic’s Open Interest declines – Is market enthusiasm fading?

• Ethereum Classic’s Open Interest dropped significantly from its early February peak, indicating reduced trader participation.
• The price remained below the 50-day MA at $24.82, with resistance at $23.38 and $25.22.

Ethereum Classic [ETC] saw a sharp increase in Open Interest [OI] at the beginning of February, crossing the $221 million mark.

However, this momentum has since faded, with OI steadily declining. With price action stagnating as well, traders are closely watching whether ETC can regain its previous strength or continue on a downward trajectory.

ETC’s Open Interest trends and market sentiment

Ethereum Classic has experienced a notable shift in Open Interest [OI], with levels surpassing $221 million at the beginning of February. 

This surge suggested renewed trader engagement, potentially signaling higher volatility in the market.

However, as the month progressed, Open Interest exhibited signs of stagnation, raising questions about whether the initial momentum could be sustained.

Source: Coinglass

A look at the OI chart revealed that it peaked in early February, rising to over $221 million, before witnessing a gradual decline.

The drop aligns with a cooling phase in ETC’s price action, reflecting a decline in speculative positioning. As of this writing, the OI was around $134 million.

Historically, rising Open Interest and increasing prices indicated a strong market conviction, whereas a decline may suggest fading enthusiasm or profit-taking behavior.

ETC price action: Key levels to watch

ETC’s price has fluctuated in the last few days, and it has struggled to maintain a strong upward trajectory.

The recent price action showed that Ethereum Classic has been consolidating around the $21 mark after facing resistance near $24.82 [50-day MA]. 

This level is crucial, as it serves as both psychological resistance and a potential pivot for further movement.

Source: TradingView

The 200-day moving average at $22.99 remains another significant threshold. A decisive breakout above this level could indicate a resurgence in bullish sentiment. 

However, if prices fail to breach these resistance zones, a downward retracement toward $19.96 [S2 pivot] could be on the table.

The Chop Index reading of 40.66 suggests moderate market choppiness, reinforcing the idea of an indecisive trend direction in the short term.

Trading volume and market strength

Volume analysis showed a sharp increase in trading activity at the start of February, aligning with the OI surge. However, trading volume has since decreased, which could point to waning investor interest. 

The volume spike earlier in the month suggested a high market participation level, but the subsequent decline hints at reduced liquidity and weaker momentum.

Source: Santiment

If volume remains low while ETC consolidates, it could indicate that traders are waiting for a clear direction before making substantial moves. In contrast, a sudden volume uptick could fuel another round of price volatility.

What’s next for ETC?

The fading Open Interest, alongside a consolidation in price, suggests that Ethereum Classic may be at a crossroads.

If buyers step in and push ETC above the key resistance levels of $24.82 and $22.99, the asset could regain bullish momentum. 

On the downside, a failure to hold above $21 could invite further selling pressure, leading to a retest of the $19.96 support level.

Traders should closely watch volume trends and OI changes in the coming days to gauge the sustainability of any potential price movements. 

As ETC navigates this consolidation phase, market participants remain cautious, awaiting a decisive breakout or breakdown to dictate the next trend direction.