Ethereum has decreased by nearly 1% in the last 24 hours. This decline is not that significant. What matters is what happened before.
In mid-January, Ethereum broke out from a clearly inverted head-and-shoulders pattern. The situation looked promising. The movement increased, large players bought, and the price rose above a key level. Under normal conditions, this usually leads to continued upward movement.
Instead, Ethereum stopped at a critical level and has since decreased by nearly 16%. This was not a coincidence. A supply wall worth about 4 billion USD met the buyers and turned the breakout into a classic bull trap.
A breakthrough that went straight towards the 4 billion USD barrier
Ethereum's inverted head-and-shoulders pattern began to form at the end of October. The breakout was confirmed on January 13 when the ETH price clearly rose above the neckline.
The movement did not go wrong because the buyers disappeared.
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The course failed because the price encountered a dense cost basis wall.
Cost basis data shows that many Ethereum holders bought between 3,490 and 3,510 USD. Approximately 1,190,317 ETH was accumulated in this area. With an average price near 3,500 USD, that corresponds to about 4.1 billion USD in supply.
A cost basis wall arises when a lot of ETH was purchased within a small price range. When the price returns there, many sell to break even. This early selling creates strong resistance, even though the sentiment looks positive.
That was exactly what happened near 3,407 USD where the selling pressure stopped the breakout.
Ethereum approached the wall, paused, and fell back. The breakout held technically for a while, but the structure was already weak. The supply was too large. Thus, an important group of buyers got stuck!
Whales bought the rise – but got stuck
What makes the situation more dangerous is that ETH whales actually did the right thing.
After the breakout confirmation on January 15, large holders increased their purchases. Whale balance rose from about 103,11 million ETH to 104,15 million ETH, an increase of approximately 1,04 million ETH or nearly 3 billion USD.
They continued to buy even when the price began to fall, clearly showing average behavior.
When looking at just whale accumulation, it often looks positive. But this time it was not enough.
The explanation lies off-chain. ETF flows turned sharply. The week ending January 16 had strong inflows, aiding the breakout. The following week, ending January 23, saw a net outflow from ETFs of 611,17 million USD.
That change affected the market. Selling ETFs provided steady and targeted pressure just as Ethereum tested an important supply wall. Whale purchases met resistance there. Even large holders got stuck above support when the Ethereum price fell.
Therefore, the decline continued despite players accumulating more. Demand was present, mostly from whales, but the supply was larger. The wall prevailed. When ETF flows and cost basis resistance meet, the price structure breaks quickly.
Ethereum price levels determine what happens next
Ethereum is now back in the previous range, and the structure is weak.
Downward, 2,773 USD is the important level, as we see later on the Ethereum chart.
If the price closes below this area, the right shoulder in the inverse head-and-shoulders formation breaks, confirming the bull trap. This movement also threatens the area where the cost basis lies between 2,819 and 2,835 USD.
This area has high demand and can absorb selling pressure, but if it is lost, Ethereum risks falling faster.
The structure weakens quickly under this area. Upward, a recovery must occur gradually.
First, Ethereum needs to reclaim 3,046 USD. This stabilizes the price, but it is not enough. The real test is at 3,180 USD, which turns the supply wall at 3,146 to 3,164 USD. When that area is cleared, we see demand return.
Even then, there is strong resistance remaining. The large sell wall at the area of 3,407 to 3,487 USD still dominates the chart. It is the same area that stopped the breakout and initiated the decline.
As long as Ethereum does not openly clear these levels, every rise is vulnerable. The conclusion is simple.
Ethereum did not fail because the buyers were weak. It failed because the supply was too large. If nothing changes, the bull trap continues to be active.