Ethereum prices are extending gains as an all-time-high leverage ratio in the derivatives market draws investors' attention.

But BeInCrypto, a blockchain media outlet, reported on March 12 that bearish signals are hidden behind the apparent uptrend, raising the possibility of a correction ahead.

Ethereum is recently trading in what it called the most speculative derivatives environment. According to CryptoQuant, the estimated exchange leverage ratio jumped to about 0.78, a record high. Open interest also surged as leverage increased. It rose 8.6 percent in just 3 days, to about $10.21 billion on March 12 from about $9.4 billion on March 9. That indicates new leveraged positions are entering the market.

There is also another signal suggesting the possibility of weakness in Ethereum. Ethereum's funding rate recently fell to minus 0.017 percent, increasing short positions. The funding rate later recovered to minus 0.004 percent, increasing long positions, but volatility could rise sharply if price momentum fails to keep up.

On the daily chart, Ethereum is forming a head-and-shoulders pattern. A rising neckline is a feature of the pattern, meaning the support level is gradually rising as investors buy on each dip. But that can reinforce the bearish structure. If the neckline rises, it becomes harder to predict the timing of a decline, and a strong correction is more likely if long positions are formed within a bearish pattern, it said.

The pattern's target suggests a drop of about 15 percent from the neckline. The final target is about $1,680, but $1,800 is likely to be a key downside point. But the bearish pattern could be invalidated. If Ethereum breaks above $2,080, the right-shoulder resistance, the pattern begins to weaken. A break above $2,200 would completely invalidate the head-and-shoulders pattern and bullish momentum could return.

Until then, a record-high leverage ratio, rising open interest, hidden RSI divergence and a bearish pattern together suggest Ethereum may be vulnerable to a deeper correction, the outlet said.