Ethereum bulls might already be facing their biggest test of Q3. On the macro front, a swift return of risk-off sentiment followed the collapse of the U.S.-Iran ceasefire, resulting in a pronounced market-wide sell-off and underscoring the continued sensitivity of risk assets to geopolitical events. A recent position taken by an Ethereum trader underscored this volatility. Arkham Intelligence reports that an Ethereum trader has established a short position on ETH amounting to $86.99 million, with a liquidation threshold established at $2,172. Notably, the position emerged following headlines regarding the collapse of the ceasefire and the U.S. terminating a trade deal with Spain, which added further pressure to market sentiment.
This indicates that the position was probably a strategic wager on additional declines rather than an arbitrary short. In a development contributing to market uncertainty, Arkham Intelligence has identified a wallet movement associated with Ethereum founder Vitalik Buterin, who has transferred $1.6 million worth of ETH to a newly established wallet. The move has ignited speculation regarding the potential for another sell-off, particularly in light of recent ETH transfers attributed to Vitalik. With the market already shifting back into a risk-off mode, the combination of potential sell-side pressure and a substantial $80 million ETH short position has established a more cautious environment for bulls. The key question now is whether this short position is an early signal of a deeper ETH breakdown or if bulls can defend key support levels and trigger a short squeeze.
Ethereum finds itself at the intersection of unfavourable market dynamics and a robust technical framework. While risk-off sentiment, rising short interest, and selling pressure bolster the bearish argument, Ethereum is currently retesting the critical $1,580 support level. This zone has acted as a major demand area over the past three years, triggering strong recoveries, including a +149% rally in October 2023 and a +203% in April 2025. For bulls, defending $1,580 is therefore critical to maintaining the bullish structure intact. In a development that reinforces the support narrative, Bitmine, associated with Tom Lee, persists in its accumulation of ETH. Lookonchain reports that Bitmine has acquired an additional 40,000 ETH, valued at approximately $71.6 million.
Simultaneously, the supply of staked ETH has achieved a new peak, exceeding 40 million ETH, which accounts for approximately 33% of the total supply. With this accumulation, ETH’s move above $1,750 appears to signify more than merely a transient rebound. Instead, bulls seem to be entering the market despite the prevailing risk-off sentiment, increasing short interest, and apprehensions regarding Vitalik’s recent ETH transfer. If this momentum continues, the 80 million short position could come under pressure, with liquidation risk building around 2.7k. In this configuration, Ethereum’s technical framework may be establishing a bear trap.