Key takeaways:
Ether gained 5% following a “Monday trap,” but the risk from leverage is increasing as Binance’s ELR hits all-time highs.
With $1.65 billion in stablecoin inflows and 208,000 ETH withdrawals, accumulation remains strong.
Maintaining $4,700 for ETH keeps the possibility of reaching $5,000 alive, while a drop below it could lead to a sharper correction.
Ether (ETH) has demonstrated resilience against Bitcoin (BTC) by overcoming the latest “Monday Trap,” a recurring phenomenon where leveraged longs experience significant liquidations at the beginning of the week. While ETH surged by 5% on Tuesday, BTC’s growth was limited to just 1%.
Data shows that Mondays typically see the highest long liquidations, with spikes exceeding 300,000 ETH during the downturns in April and June. This pattern highlights how weekend optimism turns into losses as liquidity returns at the week’s start.
Despite the recovery, ETH’s derivatives market indicates overheating. Binance’s Estimated Leverage Ratio (ELR) for ETH has skyrocketed to a record 0.53, a significant increase from just 0.09 in mid-2020.
ELR measures the ratio of open interest to exchange reserves, providing insight into the extent of traders’ leverage use. Higher ratios suggest excessive optimism and a greater potential for forced liquidations.
With ETH open interest reaching a new all-time high of $70 billion on Aug. 22, such extremes imply short-term risk, as excessive positions can often precede sharp deleveraging events that eliminate traders before the next upward movement.
In contrast, the spot flows reveal a picture of strength. Analyst Amr Taha points out that Binance saw over $1.65 billion in stablecoin deposits this month, marking the second surge above $1.5 billion in August.
These inflows indicate new liquidity entering the market. Concurrently, Ether withdrawals from Binance totaled nearly 208,000 ETH, equivalent to $1 billion, between Aug. 24–25, implying investors are transferring assets into cold storage, minimizing sell-side pressure and strengthening long-term bullish positions.
The combination of rising leverage and institutional accumulation puts ETH at a pivotal moment. While liquidity inflows and exchange outflows lean bullish, extreme leverage raises the likelihood of short-term volatility.
Related: SharpLink added $252M ETH last week, $200M war chest left
Ether bulls need to reclaim $4,700 for control
Ether made significant gains on Tuesday, rising to $4,579 after absorbing liquidity from a daily order block and retesting long-term support at $4,350. Momentum on shorter timeframes remains positive, but sustainability is crucial for continuation.
On the mid-term chart, price action is currently addressing a bearish fair value gap between $4,600 and $4,450, with a risk of extending to the $4,000 level if selling pressure continues.
For this gap to be closed, ETH must reclaim prior equal lows near $4,662 and achieve a decisive daily close above $4,700. Such a movement would align various time frame structures, restoring bullish momentum and paving the way to $5,000.
In contrast, ongoing consolidation below $4,700 would indicate that the rally is mainly due to short covering, where closing short positions create temporary upward pressure, while sellers seek to re-enter at higher points to drive prices down.
Failing to reclaim $4,700 keeps ETH confined within a crucial range of $4,700 and $4,350, where a break below $4,350 would likely lead to a deeper correction aligned with seasonality and a potential shift in market structure.
Until then, $4,700 remains the crucial pivot point separating a correction from a renewed bullish leg.
Related: Price predictions 8/25: SPX, DXY, BTC, ETH, XRP, BNB, SOL, DOGE, ADA, LINK
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
