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Market intelligence platform IntoTheBlock has revealed how Ethereum has formed a strong on-chain demand zone that should keep it above $4,000.
There are two major support points just below Ethereum’s current price
in a new Post On X, IntoTheBlock discusses what on-chain demand zones are looking like for Ethereum right now. Below is a chart shared by the analytics firm that shows the amount of supply purchased by investors at a price range close to the current spot ETH price.
As seen in the graph, Ethereum prices move up with only small dots associated with them, meaning that not much supply was purchased at those levels last time.
This is different for the price ranges below, however, as the $3,772 to $3,892 and $3,892 to $4,011 ranges in particular host the cost base of a significant number of addresses. In total, investors bought 7.2 million ETH at these levels (worth approximately $28.4 billion at the current exchange rate).
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Demand areas are considered important in on-chain analysis due to how investor psychology works. For any holder, their cost basis is an important level, so they may be more likely to make a move when it is retested.
When this retest occurs from above (that is, the investor was in profit before), the holder may decide to buy more thinking that the level will be profitable again in the near future. Similarly, investors who were in losses just before the retest may fear another decline, so they may sell at their break-even.
Naturally, these effects do not matter to the market when only a few investors participate in buying and selling, but can cause visible fluctuations when a large number of holders are involved.
The above price ranges meet this condition, so it is possible that Ethereum retesting them will generate a large buying reaction in the market, which will ultimately provide support to the cryptocurrency.
Over the past day, Ethereum has seen a slight dip in this region, so it now remains to be seen whether higher demand can push the coin above $4,000.
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In some other news, Ethereum exchange netflow has been negative since the beginning of the month, as IntoTheBlock reported in another Post,
Exchange Netflow is an on-chain indicator that tracks the net volume of Ethereum flowing into or out of wallets associated with centralized exchanges. “There have been inflows of over 400k ETH since December 1, indicating an accumulation trend,” the analytics firm says.
eth price
At the time of writing, Ethereum is trading around $3,950, up 10% from last week.
Dall-E, featured image from IntoTheBlock.com, chart from Tradingview.com
