Ethereum (ETH) recently set a new all-time high above $4,900 before entering a correction phase. At present, ETH is trading around $4,594, representing a decrease of about 6.9% from the peak but still recording an 8.8% increase over the past week.
This move comes after a strong growth phase lasting several weeks, bringing ETH back to price levels not seen since the 2021 bull cycle. While the long-term outlook for Ethereum still leans bullish, analysts are focusing on short-term patterns to explain current volatility.
"Monday Trap" and the risks of excessive leverage
One of the notable perspectives comes from XWIN Research Japan, a research unit contributing to CryptoQuant's QuickTake platform. They emphasize that ETH's price action in the short term is strongly influenced by leverage liquidation cycles, especially at the beginning of the week.
Specifically, the Ethereum derivatives market frequently sees high-leverage Long positions getting wiped out when prices reverse suddenly. These liquidations often amplify downward volatility.
In April and June 2025, ETH witnessed Long position liquidation volumes exceeding 300,000 ETH in a single day during strong correction phases. XWIN Research identifies a recurring pattern:
Monday: Highest liquidation volume.
Sunday & Friday: Follow closely behind in liquidation pressure.
Saturday: Usually the lowest due to decreased market liquidity.
This pattern, known as the 'Monday Trap', shows that traders holding leveraged positions over the weekend are vulnerable when large cash flows from institutions and individuals return to the market at the beginning of the week.
An analyst emphasizes:
"Carrying optimistic sentiment from the weekend into a more active trading session on Monday is extremely risky. Short-term leverage not only amplifies profits but also magnifies losses in entirely predictable ways."
For long-term investors, this cycle does not carry much significance regarding price trends, but serves as an important reminder of the risks of excessive leverage in a highly liquid market like Ethereum.
Technical view: Key support zone and price scenario
From a technical analysis perspective, the current correction of Ethereum is being closely monitored by investors as it occurs right after prices established a new historical high. According to market expert Crypto Patel, ETH has dropped from $4,957 to $4,400, indicating strong profit-taking as well as the impact of leveraged liquidations in the derivatives market.
Notably, the area of $3,900 – $4,000 is emerging as a pivotal support in the mid-term trend structure. This is a confluence zone of:
Horizontal support, which previously acted as strong resistance.
50-day moving average (MA50) – an indicator commonly used by traders to confirm trends.
High liquidity area, where many potential buy orders are concentrated after the accumulation phase.
Bullish scenario
If ETH maintains above the $3,900 – $4,000 range, it will be seen as a 'successful retest', reinforcing the role of this strategic support zone. In this scenario, new capital may continue to flow in, driving ETH to extend its bullish trend towards higher targets of $6,000 – $6,500, and even further to the $7,500 – $8,000 range if the market maintains positive momentum.
Bearish scenario
Conversely, once the $3,900 support is breached with large volume, ETH will enter a deeper correction phase. At that point, the next support zones mentioned by analysts are $3,500 – a level that previously held significant balance, and even $3,200, which was the bottom of the previous accumulation. A drop to these levels does not mean that the long-term bullish trend is broken but will prolong the accumulation period and weaken the sentiment of short-term investors.
In this context, the intersection between liquidation pressure from the leverage market and key technical support levels will be key in shaping ETH's next path. If leverage continues to be reduced, the spot market may become the main driver, determining the direction in the coming months.
Institutional cash flow and demand: Long-term supporting factor
Alongside technical factors, recent on-chain data and institutional capital flows are providing additional important signals about the mid to long-term outlook for Ethereum.
On-chain cash flow: Signs of accumulation rather than distribution
According to data from blockchain analytics platforms like Glassnode and CryptoQuant, the net ETH outflow from centralized exchanges in recent weeks is at its highest level since the beginning of the year. Specifically:
The ETH balance on exchanges has been steadily decreasing, reflecting investors shifting assets to cold wallets or self-custody wallets.
This behavior is often associated with long-term accumulation trends, rather than preparing for short-term sell-offs.
History shows that whenever cash flow out of exchanges increases significantly, the market often enters a phase of liquidity shortage for selling, facilitating price recovery or more sustainable growth.
Notably, the ETH staking rate after The Merge continues to rise steadily, reflecting increasing confidence in the 'proof-of-stake' model and the potential for generating passive income from staking. This also reduces the circulating supply of ETH in the market, contributing to long-term supply pressure.
Institutional cash flow: The long arm of sustainable demand
From a macro and institutional perspective, Ethereum is witnessing increasing interest from traditional financial institutions, especially after the approval of the Bitcoin spot ETF, which attracted record capital flows.
Notable factors:
Many large investment organizations (including digital asset funds, fintech companies, and investment banks) are considering integrating ETH into their strategic investment portfolios, not only due to its price appreciation potential but also thanks to the staking mechanism that generates stable yields of 3% - 5% per year.
Some asset managers are filing applications to launch Ethereum ETFs with integrated staking, which, if approved, would mark a significant turning point in legitimizing ETH as a 'standard' financial asset in the eyes of institutional investors.
Incorporating staking into ETF products will create structural net buying pressure, as to ensure yield for investors, issuing organizations must hold actual ETH and stake it.
If this scenario materializes, ETH will not only become a legitimate investment asset similar to low-yield bonds but will also open new capital flows from pension funds, insurance funds, and conservative institutional investors seeking stable return instruments in a cooling interest rate environment.
Short-term volatility – Long-term remains positive
Of course, one cannot overlook the fact that the ETH market is still facing significant short-term volatility, particularly from:
The 'Monday Trap' phenomenon – where prices often bounce up at the beginning of the week but are quickly sold off due to leveraged position liquidations.
Leveraged liquidation activity (Long squeeze) when prices drop below key technical thresholds.
Cautious sentiment after setting a new high, causing short-term investors to tend to take profits faster, creating localized selling pressure.
However, from a mid to long-term perspective, fundamental factors such as cash flow out of exchanges, increasing staking rates, and the gradual participation of institutional capital are still creating a solid foundation for more sustainable bullish trends in the future.
Investors are advised to closely monitor the support zone of $3,900 – $4,000, while managing leverage risk appropriately to avoid getting caught in liquidity volatility that has become a hallmark of the Ethereum market.