Ethereum recorded a decrease of about 1% over the past 24 hours. Consider that this movement alone is not significant, but what matters is what happened before it.
In mid-January, Ethereum recorded a breakout from a clearly defined inverse head and shoulders pattern. The setup appeared constructive. Momentum improved, whales began buying, and the price exceeded a key structure. Under normal conditions, this combination supports the continuation of the trend.
Instead, Ethereum stopped near a critical wall and then corrected a drop of about 16%. Consider that this failure was not random. A supply wall of approximately $4 billion quietly absorbed the supply, turning the breakout into a classic bull trap.
A breakout surged directly towards the $4 billion barrier.
The inverse head and shoulders pattern for Ethereum began forming in late October. The breakout was confirmed on January 13, when the price of ETH pushed above the neckline and continued rising confidently.
Note that this move did not fail due to buyers disappearing.
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The reason for the failure is due to the price facing a thick wall in buy cost.
Buy cost data indicates a large group of Ethereum holders between $3,490 and $3,510. Approximately 1,190,317 ETH was accumulated in this area. This represents around $4.1 billion in supply at an average price close to $3,500.
A buy cost wall is formed when a large amount of ETH is purchased previously within a narrow price range. When the price returns to that area or even approaches it, holders often sell to realize profits. This type of early distribution creates strong resistance, even if the mood seems bullish.
That happened just around $3,407, where selling forces pushed and thwarted the breakout attempt.
Pushed Ethereum strongly towards the wall, then stopped and retracted. The breakout technically continued for a moment, but market structure was already under threat. The supply was too large at the top. A core group was held during this process!
Whales bought the breakout — and fell into the trap.
What makes this scenario more dangerous is that ETH whales did the 'right thing'.
Since January 15 (after the breakout confirmation), major holders continued to increase their exposure. Whale balances rose from around 103.11 million ETH to 104.15 million ETH, an increase estimated at 1.04 million ETH or close to $3 billion.
This buying continued even as the price began to retract, showing a clear average behavior.
The whale accumulation process seemed supportive in itself. But this time, it was not enough.
The reason for this was outside chain behavior, where ETF flows reversed sharply. The week ending January 16 saw strong inflows, which helped support the breakout. The following week, ending January 23, net outflows of $611.17 million were recorded from ETF funds.
This shift had a clear impact. Selling from ETF funds added continuous and direct pressure at the same time Ethereum was testing a strong supply wall. Whale buying faced resistance here. Even large holders were effectively held above support while Ethereum's price declined further.
This explains why the correction continued despite accumulation. There was demand, mostly from whales, but supply was stronger. The wall won. When ETF flows align with average cost resistance, price builds collapse quickly.
Ethereum price levels that define what happens next.
Reintroduced Ethereum into the previous range, and the structure weakened further.
Identified the level of $2,773 as the critical level, highlighting it later on the Ethereum price chart.
Clarified that a daily close below this area would lead to breaking the right shoulder of the inverse head and shoulders pattern and fully confirm the bull trap. Added that this move would also put the cost basis cluster from $2,819 to $2,835 at risk.
Confirmed that although this area has strong demand capable of absorbing selling pressure, losing it would expose Ethereum to a rapid decline.
Weakened the structure quickly without that level. On the upside, recoveries must happen in stages.
He mentioned that initially, Ethereum needs to regain the level of $3,046. This price will hold, but it is not enough. The real test lies at $3,180, which flips the supply wall between $3,146 and $3,164. Indicated that breaking through that area would signal a return of real demand.
Even so, resistance remained strong. The larger sell wall around the $3,407-$3,487 area continued to dominate the chart. This is the same area that rejected the breakout and caused the correction.
Wait for Ethereum to clearly exceed these levels; the rises remain at risk. The key points of the article are simple.
Explain that Ethereum did not fail due to weak buyers. It failed because it faced tremendous supply. Until that changes, the bullish market trap remains effective.
