Ethereum price jumped over 180% between April 9 to July 25, reaching a high of $3,945. The main bullish catalyst was the Ethereum Pectra Update. Also, heavy buying by institutions drove open interest above $8 billion. The bullish surge was well covered by the community and caused FOMO among the retail traders. Traders bought at the resistance. They hoped for a clear breakout. But it was an Ethereum bull trap – or it still is?
The process of understanding the Ethereum market movement consists of three main steps. First, examine the driving forces behind the rally. Data indicates institutional investors dominate the current Ethereum surge. Open interest data from TradingView shows a sharp rise, suggesting increased long trades. This trend aligns with institutional strategies, where large players accumulate positions.
Second, assess retail investor behavior. Short-term holders of Ethereum grow, and spot buying by retail traders escalates. The In/Out of Money data further reveals that most Ethereum addresses purchased between $2,200 and $2,500, now enjoying substantial profits.
Third, evaluate the risks of emotional trading. The combination of institutional activity and retail FOMO creates a scenario where prices may drop if institutions sell, leaving retail traders vulnerable.
Institutional investors often follow a calculated approach. They pump the price upward, attracting retail traders eager to join the rally. Once retail participation peaks, institutions sell their holdings. They pocket profits while triggering a price decline. The recent open interest surge, coupled with rising short-term holder numbers, supports this pattern. Retail traders, driven by the fear of missing out, enter long positions. However, the In/Out of Money analysis indicates that many addresses hold Ethereum bought at lower levels. If these holders begin taking profits, the market could reverse and, ultimately, trap retail traders in losing positions. A perfect Ethereum Bull Trap!
Ethereum Bull Trap
The price currently trades near a resistance level, with a green shaded area marking a potential ceiling. Below, the open interest graph has been climbing since July 2025, which also mirrors the price increase. This correlation suggests retail traders open long positions to bet on continued growth. Yet, the early buyers sit on huge profits. A sell-off from these holders could trigger a bearish rally, and the retail traders would likely suffer the most. Traders must approach this situation with caution. Emotional decisions, especially driven by market hype, lead to poor outcomes. The data advises against rushing into trades based on current enthusiasm. The traders must avoid impulsive moves.
As of August 01, 2025, Ethereum’s market shows signs of institutional manipulation. The rally lifts prices, but the underlying data hints at a setup for retail traders. Institutions benefit from this strategy, while retail participants face potential losses. Avoiding FOMO and maintaining discipline offer the best defense.
Currently, the Ethereum market presents a complex picture. The current rally, fueled by institutional activity and retail interest, carries the risk of a bull trap. The on-chain data highlights the profit-taking potential of early buyers. By staying patient and informed, traders protect themselves from sudden downturns.
