Ethereum has fallen almost 1% in the last 24 hours. That movement alone is not significant. What matters is what happened before.
In mid-January, Ethereum had a breakout from a clear inverted head and shoulders pattern. The structure looked positive. Momentum was improving, whales were buying, and the price surpassed a key structure. Under normal conditions, that combination supports continuity.
In contrast, Ethereum stopped near a critical wall and has since corrected almost 16%. This was not a random failure. A supply wall, with an approximate value of 4 billion dollars, quietly absorbed the demand, turning the breakout into a classic bull trap.
A $4 billion breach crashes into the wall.
Ethereum's inverted head and shoulders pattern began to form in late October. The breakout was confirmed on January 13, when ETH's price crossed the neckline and rose confidently. That move did not fail because buyers disappeared.
It failed because the price hit a dense cost base wall. Cost base data shows a large group of Ethereum holders between $3,490 and $3,510. Approximately 1,190,317 ETH accumulated in this zone. At an average price near $3,500, that represents around $4,1 billion in supply.
A wall of the cost base forms when a large amount of ETH was bought earlier in a tight price range. When the price returns to that area or approaches it, holders usually sell to break even. That type of early distribution creates strong resistance, even if the sentiment is bullish.
That’s exactly what happened near $3,407, where selling pressure ended the breakout.
Ethereum approached the wall, stalled, and retreated. The breakout technically held for a moment, but structurally it was already compromised. The supply above was simply too big. And it trapped a key group in the process!
Whales bought and got trapped.
What makes this situation more dangerous is that ETH whales did 'the right thing.' From January 15 onward (after the breakout confirmation), large holders steadily increased their exposure.
Whale balances increased from approximately 103,11 million ETH to 104,15 million ETH, an increase of about 1,04 million ETH or nearly $3 billion.
Purchases continued even as the price began to retreat, showing a clear average behavior.
In isolation, whale accumulation looks like support. But this time, it was not enough. The reason lies in on-chain behavior.
ETF flows changed drastically. The week ending January 16 had strong inflows, helping to drive the breakout. The following week, ending January 23, saw net ETF outflows of $611,17 million.
That change was significant. ETF sales added constant and bearish pressure just as Ethereum was testing a large supply wall. Whale purchases faced resistance here. Even large holders got trapped above support as Ethereum's price fell further.
This explains why the correction continued despite the accumulation. There was demand, especially from whales, but supply was greater. The wall won. When ETF flows and cost base resistance align, the price structure weakens rapidly.
Levels that could decide the next direction of Ethereum's price.
Ethereum has returned to the previous range, and the structure is weak. On the downside, $2,773 is the critical level, as shown later in the Ethereum price chart.
A daily close below this zone would break the right shoulder of the inverted head and shoulders pattern and fully confirm the bullish trap. That move would also jeopardize the cost base cluster between $2,819 and $2,835.
Although this is a high-demand zone that can absorb selling pressure, losing it would expose Ethereum to a rapid decline.
Below that, the structure weakens rapidly. On the upside, the recovery must occur in stages.
First, Ethereum needs to reclaim $3,046. That would stabilize the price, but it’s not enough. The real test lies at $3,180, which inverts the supply wall from $3,146 to $3,164. Surpassing that zone would indicate that real demand is returning.
Still, resistance remains strong. The largest sell wall around the $3,407 to $3,487 zone still dominates the chart. It’s the same area that rejected the breakout and triggered the correction.
Until Ethereum clearly surpasses those levels, rallies remain vulnerable. The conclusion is simple.
Ethereum did not fail because buyers were weak. It failed because the supply was overwhelming. Until that changes, the bullish trap remains active.
