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Ethereum’s recent sharp decline highlights a critical bull trap that erased substantial gains, putting key support levels under intense pressure.
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The unwinding of leveraged positions has intensified selling, with smart money potentially capitalizing on the reset amid broader market deleveraging.
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COINOTAG reports emphasize the importance of the $2,400 support level as a pivotal point that could determine Ethereum’s near-term trajectory.
Ethereum’s 15% drop after a bull trap signals a crucial test for support levels as leverage unwinds and smart money eyes strategic entry points.
Ethereum’s Leverage Unwind Drives Market Correction
The recent market correction in Ethereum is primarily driven by a significant unwind of leveraged positions, marking a shift from speculative exuberance to cautious recalibration. On June 11th, Ethereum’s Open Interest (OI) reached an unprecedented $41.45 billion, surpassing previous bull market peaks and signaling an overheated market environment. This surge in leverage was particularly evident on Binance, where ETH OI climbed 38% within five days to $6.9 billion, the second-highest level recorded in 2025.
Such aggressive positioning was fueled by improving macroeconomic conditions, including a U.S.-China trade deal and dovish monetary policy expectations, which temporarily boosted risk appetite. However, the rapid accumulation of speculative capital set the stage for a sharp correction once profit-taking and liquidations commenced. Over the past 72 hours, Ethereum’s OI has contracted nearly 14%, reflecting a swift deleveraging process that has disproportionately impacted ETH compared to Bitcoin.
Impact of Market Dynamics on Ethereum’s Price Action
The interplay between leverage and price volatility has been stark in Ethereum’s recent price movements. Futures traders, anticipating a breakout above the $3,000 mark, were caught off guard by the ensuing bull trap that led to a nearly 15% price decline from the weekly high of $2,878. This snapback not only reset overextended positions but also exposed vulnerabilities in the $2,600 support zone, which briefly gave way to lows around $2,440.
Such volatility underscores the delicate balance between speculative enthusiasm and market fundamentals. The forced liquidation of leveraged positions has drained liquidity from derivatives markets, amplifying downward pressure. This environment challenges retail investors, many of whom are retreating, while more sophisticated market participants appear to be accumulating at lower levels.
Smart Money’s Strategic Accumulation Amidst the Dip
In contrast to retail sentiment, which has skewed bearish amid the recent sell-off, data from Lookonchain reveals that a prominent whale has been aggressively purchasing Ethereum. This entity has acquired approximately 48,825 ETH, valued at $127 million, averaging a price near $2,605. Such accumulation suggests confidence in the medium-term prospects of Ethereum and highlights a potential floor for the current correction.
Nevertheless, the sustainability of this support remains uncertain. The $2,400 level is critical; if breached decisively, it could trigger further forced liquidations rather than panic-driven selling. This scenario would deepen the correction and potentially reshape market positioning for the weeks ahead.
Broader Market Implications and Future Outlook
The Ethereum correction serves as a microcosm of the broader crypto market’s ongoing deleveraging phase. While Bitcoin has demonstrated relative resilience, ETH’s sharper pullback reflects its higher sensitivity to leveraged speculation. Market participants should closely monitor Open Interest trends and support levels to gauge the next directional move.
Investors are advised to exercise caution and consider the evolving risk landscape, as the next 48 hours are poised to be pivotal. The interplay between smart money accumulation and retail capitulation will likely define Ethereum’s short-term price path and influence overall market sentiment.
Conclusion
Ethereum’s recent bull trap and subsequent 15% decline underscore the risks inherent in leveraged trading within volatile markets. The critical support at $2,400 now stands as a decisive battleground between further downside risk and potential recovery. While smart money’s strategic accumulation offers a glimmer of stability, the market remains fragile amid ongoing deleveraging. Careful observation of Open Interest and price action will be essential for investors seeking to navigate this complex environment.
