Ethereum is once again at the center of attention in the crypto markets, hovering around $3,533 after a turbulent week that saw its price fall by over 8.6%. Despite the downturn and the growing pessimism among some traders, deeper market signals may be telling a different story—one that suggests a classic bear trap could be in play. While many expect further declines, data from on-chain activity, trader positioning, and price structure hint that Ethereum might be preparing for another leg up.
Over the past 30 days, on-chain metrics show a subtle yet important shift in how different classes of holders are reacting to Ethereum’s price action. Whales—wallets with large ETH holdings—have increased their holdings by 1.82%, while retail investors, those with smaller holdings, have raised their exposure by a similar 1.87%. These two groups often act at different ends of the market spectrum, yet both appear to be showing confidence in Ethereum’s long-term potential. Interestingly, mid-tier wallets, typically held by casual or less informed investors, have begun selling, potentially transferring their ETH to either whales or retail users. This redistribution points to a possible setup in which large and small investors alike are positioning ahead of a larger move—while less committed players exit.
Backing up this sentiment is data from IntoTheBlock, which tracks wallet behaviors to determine market bias. According to their Bull vs Bear address indicator, more wallets have been buying than selling. Bulls, defined as those purchasing more than 1% of the daily trading volume, outnumber bears—who have sold over 1%—by a margin of 7. While this edge isn’t overwhelming, it still indicates a tilt in sentiment toward accumulation rather than panic-driven selling. This behavioral trend suggests that many investors believe in Ethereum’s upward potential and are using the recent price weakness as an entry point.
Further reinforcing this narrative is the long/short account ratio on Binance, one of the largest crypto exchanges. The ratio currently stands at 1.91, indicating that there are nearly twice as many user accounts holding long positions as short ones. Unlike position volume, which looks at trade size, this metric tracks how many traders are betting on the price to rise versus fall. This disproportion suggests that despite recent price volatility, the majority of traders remain bullish. Historically, similar ratios have preceded major price rallies, as widespread optimism eventually translates into significant buying momentum.
On the technical side, Ethereum’s price action continues to respect a broader bullish pattern known as an ascending triangle. This pattern, formed over the last several weeks, followed a powerful surge from a low of $2,120 to a local high near $3,939. Since then, ETH has been consolidating within a narrowing range. A key level to watch is the $3,785 price mark, which previously acted as support and could now serve as a breakout point. Although this level was briefly lost, ETH managed to rebound from the $3,356 support zone, a move that may have trapped short sellers who anticipated a deeper breakdown.
This recent test of support and subsequent recovery offers a compelling case for a bear trap scenario. Traders who entered short positions below $3,785 expecting further downside may have already been liquidated by the quick price reversal. This kind of sudden squeeze is not uncommon in crypto markets, especially when price action baits traders into bearish positions right before a bounce. If Ethereum can close a daily candle above $3,785, analysts suggest that the price could make another run toward $3,939 and potentially push higher to $4,051. A breakout above this upper boundary would signal a clear return to bullish momentum and might open the door for Ethereum to retest its previous highs.
However, this bullish thesis depends on Ethereum holding its current support levels. If the $3,356 zone is broken convincingly, the short-term outlook could turn bearish, invalidating the current setup and potentially sending ETH into a deeper correction. For now, though, most indicators suggest that Ethereum may be building strength quietly, with smart money accumulating while retail traders wait on the sidelines.
In summary, while Ethereum’s recent performance has looked shaky on the surface, a closer look at the data reveals a more encouraging picture. From whale and retail accumulation to trader sentiment and bullish chart patterns, several factors suggest that Ethereum may have already trapped the bears and is now preparing for its next breakout. Investors watching from the sidelines would do well to pay close attention to key levels like $3,785 and $3,356 in the coming days, as these will likely determine the direction of Ethereum’s next major move.
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