Ethereum’s failed breakout above $2,600 has turned into a textbook liquidity trap after the U.S. Senate’s CLARITY Act cloture vote failed 49 to 50 on Tuesday. ETH swept resting buy-side liquidity above the month-long range on September 11, spiked to $2,660, then reversed hard and broke market structure lower on September 15. Ether is now trading near $2,410, retesting the breakdown zone while traders who bought the spike sit underwater.
The selloff was not limited to ETH. Bitcoin dropped through $76,000 in the same stretch, and CoinGlass data showed roughly $660 million in long liquidations, with longs representing 84% of the flush. Four-hour charts show Ether launched from a base near $1,900 in mid-August and chopped below $2,600 resistance before the failed breakout turned the range bearish.
Futures data suggests the move was a leverage flush rather than a conviction-driven short. Open interest across ETH futures sits near $31.4 billion, down about 3.1% in a day, while funding rates on Binance, OKX, Bybit and Bitget have reset close to flat. The U.S. dollar has also softened, with DXY near 99 versus an August high above 101.6, but that has not been enough to offset the overhead liquidity problem.
On the weekly chart, Ethereum remains well below its 2025 cycle high near $4,965, though the recovery from the correction low around $1,470 to $1,550 is still technically intact. The key reclaim level is $2,600; losing $2,350 again would open the door toward $2,000.
