Ethereum drops below $2,000 as record open interest amplifies volatility risk

Ether fell 4% to $1,967 on Thursday, its lowest since February, as spot ETF outflows extended to 12 consecutive days and futures open interest hit a record 16.39 million ETH.

"The drop under $2,000 was amplified by rising volatility and geopolitical tensions amid renewed US-Iran escalation," Kelly Ye, cofounder and CIO at Coinbridge, said.

Spot ether ETFs recorded $67.2 million in outflows Wednesday, pushing May's total to $401 million, per SoSoValue. The 12-day outflow streak is the longest this year. Futures open interest reached 16.39 million ETH, exceeding the prior record set in July 2025, Coinglass data shows. The elevated leverage combined with a declining price creates conditions prone to cascading liquidations — $237.2 million in ether positions were liquidated in the past 24 hours, with $225.1 million from longs.

The next key support sits at $1,800, the February 2026 low, according to Ye. A break below that level would open the door to $1,500, the April 2025 tariff-driven selloff floor. On the upside, ether needs to reclaim $2,000 and stabilize above $2,100 to signal a recovery.

Record leverage meets institutional exit

Open interest in ether terms exceeded 15 million ETH earlier this month, signaling speculators are positioning for a large directional move, CoinGlass data shows. When prices fall into a heavily leveraged environment, forced liquidations can accelerate the decline. Spot ether ETFs have shed more than $470 million over the past 10 trading days, data from Farside Investors shows, reflecting waning conviction after ether's failed rally to $2,400 in April.

On-chain activity diverges from price

Despite the price weakness, Ethereum's underlying network metrics remain strong. The blockchain processed over 200 million transactions in Q1 2026, a record for quarterly activity, Standard Chartered analysts noted. DeFi total value locked on Ethereum stands between $43 billion and $45 billion, roughly 53% of all global DeFi liquidity, per DefiLlama. Transaction volumes hit an all-time high of 21.8 million at the start of May.

Standard Chartered argued ether is deeply undervalued relative to its network activity, drawing a comparison to Amazon during the dot-com bust. The bank maintained a year-end target of $4,000 and a decade-end target of $40,000. More than 36 million ETH — roughly 30% of total supply — is locked in staking contracts, removing a significant chunk from the tradeable float.

The key level to watch is $1,800. If ether holds above that February low, the setup for a bounce remains intact. A break below would invalidate the higher-low pattern held since April 2025 and could trigger a deeper correction toward $1,500.

This article is for informational purposes only and does not constitute investment advice.