Ethereum has fallen nearly 1% in the past 24 hours. It’s not just the movement that matters. What matters is what happened before.
In mid-January, Ethereum broke out of a well-defined inverted head-and-shoulders pattern. The setup looked constructive. Momentum has improved, whales have increased buying, and price has cleared an important structure. Under normal circumstances, that combination supports continuation.
Instead, Ethereum stalled near a significant wall and has since corrected by almost 16%. This was no accidental failure. The breakthrough turned into a classic bull trap, with about $4 billion worth of supply walls quietly absorbing demand.
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Breakout heading straight for the $4 billion wall
Ethereum’s inverted head-and-shoulders pattern started forming in late October. This breakout was confirmed on January 13th, with ETH price rising above the neckline and rising confidently.
Just because the buyers disappeared doesn’t mean the move failed.
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It failed because the price hit a thick wall of cost base.
Cost-based data shows a large cluster of Ethereum holders in the $3,490 to $3,510 range. Approximately 1,190,317 ETH was accumulated in this zone. The average price is nearly $3,500, and the supply is worth about $4.1 billion.
If a large amount of ETH was previously purchased at a narrow price range, a cost-based wall is formed. When the price reaches or approaches that zone again, holders often sell to breakeven. Such an early distribution creates significant resistance even though sentiment appears to be bullish.
That’s exactly what happened near $3,407, where selling pressure derailed the breakout.
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Ethereum approached a wall, stalled, and rolled over. Although the breakout was technically maintained temporarily, it had already been structurally compromised. The supply overhead was too high. And in the process, they trapped the main group!
A whale bought a breakout – and got trapped.
What makes this setup even more dangerous is that the ETH whale did the “right” thing.
Since January 15th (post-breakout confirmation), large holders have steadily increased their exposure. Whale’s balance increased from approximately 103.11 million ETH to 104.15 million ETH, an increase of approximately 1.04 million ETH or nearly $3 billion.
The buying continued even after the price started to reverse, showing a clear averaging trend.
Viewed in isolation, whale accumulation appears to be supportive. But this time it wasn’t enough.
The reason lies outside of the behavior on the chain. ETF flows have reversed significantly. The week ending January 16 saw a huge influx of money, fueling the breakout. The following week (ending January 23), the ETF recorded net outflows of $611.17 million.
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That change was important. ETF selling added steady directional pressure just as Ethereum was testing a major supply wall. Here the whale purchase was met with resistance. As Ethereum prices fell, even large holders effectively became trapped above support.
This explains why the correction persisted despite accumulation. There was demand, primarily from whales, but there was more supply. The wall won. When ETF flows match cost-based resistance, the price structure collapses quickly.
Ethereum price levels that will determine what happens next
Ethereum is now back within its previous range and the structure is weak.
On the downside, $2,773 is an important level and is highlighted in the second half of the Ethereum price chart.
A daily close below this zone will break the right shoulder of the inverted head-and-shoulders pattern and fully confirm the bullish trap. This move would also threaten the $2,819-$2,835 cost-based cluster.
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This is a high-demand zone that can absorb selling pressure, but its loss could accelerate Ethereum’s decline.
Below that, the structure weakens rapidly. On the positive side, recovery should occur in stages.
First, Ethereum needs to get back $3,046. That would stabilize prices, but it’s not enough. The real test lies at $3,180, which flips the $3,146 to $3,164 supply wall. If this zone is cleared, it will be a signal that real demand will return.
Still, resistance remains high. A larger sell wall around the $3,407 to $3,487 zone still dominates the chart. It is the same zone that rejected the breakout and caused the correction.
Until Ethereum clears these levels cleanly, the rally will remain vulnerable. It’s easy to take home.
Ethereum failed not because buyers were weak. It failed because there was too much supply. Until that changes, the cow trap will remain active.
