Ethereum falls into the "Second trap": Longs are at risk of account liquidation at the beginning of the week

Ethereum (ETH) has recently set a new all-time high above 4,900 USD before entering a correction phase. At the moment, ETH is trading around 4,594 USD, which is a fall of about 6.9% from the peak but still records an increase of 8.8% over the past week.

This move comes after a strong growth period lasting several weeks, bringing ETH back to a price level not seen since the bull run of 2021. Although the long-term outlook for Ethereum remains bullish, analysts are focusing on short-term patterns to explain the current volatility.

"The Second Trap" and the risks of excessive leverage

One of the noteworthy perspectives from XWIN Research Japan, the research unit contributing to the QuickTake platform of CryptoQuant. They emphasize that the price action of ETH in the short term is strongly influenced by leverage liquidation cycles, especially at the beginning of the week.

Specifically, the Ethereum derivatives market often sees high leveraged Long positions being wiped out when the price unexpectedly reverses. These liquidation events typically amplify the downward volatility.

Liquidation of Long positions weekly for Ethereum | Source: CryptoQuantIn April and June 2025, ETH witnessed liquidation volumes of Long positions exceeding 300,000 ETH in just one day during significant corrections. XWIN Research points out a periodic pattern:

• Monday: Highest liquidation volume.
• Sunday & Friday: Ranked lower in terms of liquidation pressure.
• Saturday: Usually the lowest due to reduced market liquidity.

This model, called the "Second Trap", shows that traders holding leveraged positions from the weekend are vulnerable when large flows of money from institutions and individuals return to the market at the beginning of the week.

An analyst emphasized:

"Bringing an optimistic mindset from the weekend into a more active trading session on Monday is extremely risky. Short-term leverage not only increases profits but also amplifies losses in completely predictable ways."

For long-term investors, this cycle does not carry much significance regarding price trends, but it serves as an important reminder about the risks of excessive leverage in a highly liquid market like Ethereum.

Technical Perspective: Key Support Areas and Price Scenarios

From a technical analysis perspective, the current correction of Ethereum is being closely watched by investors as it occurs right after the price has just set a new all-time high. According to crypto market expert Patel, ETH has fallen from 4,957 USD to 4,400 USD, indicating strong profit-taking as well as the impact from leveraged liquidation activities in the derivatives market.

A noteworthy point is that the 3,900 – 4,000 USD area is emerging as a pivotal support in the medium-term trend structure. This is a confluence zone between:

• Horizontal support (, which previously acted as strong resistance.
• 50-day moving average )MA50( – an indicator commonly used by traders to confirm trends.
• High liquidity zone, where many potential buy orders are concentrated after the accumulation phase.

) Bullish scenario

If ETH maintains above the range of 3,900 – 4,000 USD, this will be seen as a "successful retest," reinforcing the role of the strategic support area. In this scenario, new capital may continue to flow in, allowing ETH to extend its upward trend towards higher targets at 6,000 – 6,500 USD, and even further to the range of 7,500 – 8,000 USD if the market maintains positive momentum.

Price fall scenario

Conversely, once the support at 3,900 USD is breached with large volume, ETH will enter a deeper correction phase. At that point, the next support areas that analysts mention are 3,500 USD – a level that previously played a significant role as a balance point, and even 3,200 USD, which was the bottom of the previous accumulation phase. A drop to these levels does not mean that the long-term bullish trend is broken, but it will extend the accumulation period and weaken short-term investor sentiment.

In this context, the interplay between liquidation pressure from the leveraged market and key technical support levels will be crucial in shaping the next path for ETH. If the amount of leverage continues to be reduced, the spot market ### may become the main driving force, playing a decisive role in the direction over the coming months.

Money Flow and Institutional Demand: Long-Term Strengthening Factors

In addition to technical factors, recent on-chain data and institutional capital flows are providing additional important signals regarding the medium and long-term outlook for Ethereum.

( On-chain money flow: Signs of accumulation rather than distribution

According to data from blockchain analysis platforms such as Glassnode and CryptoQuant, the net amount of ETH withdrawn from centralized exchanges in recent weeks is at its highest level since the beginning of the year. Specifically:

• The balance of ETH on exchanges has continuously fallen, reflecting that investors are transferring assets to cold wallets or self-managed wallets.
• This behavior is often associated with a long-term accumulation trend, rather than preparing for short-term sell-offs.
• History shows that whenever there is a significant increase in the outflow of funds from the exchange, the market often enters a phase of liquidity shortage for selling, creating conditions for prices to recover or grow more sustainably.

Notably, the ETH staking rate after The Merge continues to rise steadily, reflecting increasing confidence in the "proof-of-stake" model and the ability to generate passive income from staking. This also reduces the circulating supply of ETH in the market, contributing to long-term supply pressure.

) Institutional capital flow: The long arm of sustainable demand

From a macro and organizational perspective, Ethereum is witnessing increasing interest from traditional financial institutions, especially after the approval of the Bitcoin spot ETF, which has attracted record capital inflows.

Key features:

• Many large investment organizations ### including digital asset funds, fintech companies, and investment banks ### are considering integrating ETH into their strategic investment portfolios, not only because of its price appreciation potential but also due to the staking mechanism that generates stable yields of 3% – 5% per year.
• Some asset managers are filing for the issuance of an Ethereum ETF with integrated staking, which, if approved, will mark a significant turning point in legitimizing ETH as a "standard" financial asset in the eyes of institutional investors.
• The introduction of staking into the ETF product will create structural net buying pressure, as to ensure yield ( for investors, issuing organizations must hold actual ETH and stake it.

If this scenario becomes a reality, ETH will not only become a legitimate investment asset similar to low-yield bonds, but it will also open up new capital flows from pension funds, insurance funds, and conservative institutional investors who are looking for stable income-generating tools in a cooling interest rate environment.

) Short term is volatile – Long term remains positive

Of course, we cannot ignore the fact that the ETH market is still experiencing a lot of short-term volatility, especially from:

• The phenomenon "Second Trap" (Monday Trap) – where the price often bounces up at the beginning of the week but is quickly sold off due to leveraged position liquidation.
• Margin liquidation activity ###Long squeeze( when the price falls through important technical levels.
• The cautious mentality after hitting a new peak has led short-term investors to tend to take profits faster, creating local selling pressure.

However, when looking at the medium to long-term time frame, fundamental factors such as the outflow of funds from exchanges, the increase in staking rates, and the gradual participation of institutional capital are still creating a solid foundation for a more sustainable upward price trend in the future.

Investors are advised to closely monitor the support range of 3,900 – 4,000 USD, while managing reasonable leverage risk to avoid being caught up in the liquidity fluctuations that have become a "specialty" of the Ethereum market.

Emma