On-chain data suggests that an ethereum close below the $1,530 level could lead to a significant drop in the cryptocurrency.
ethereum Support Levels Below $1,530 Are Very Low Currently
in a new mail In X, analyst Ali analyzed what ethereum‘s support and resistance levels look like right now. However, these support and resistance levels are not technical, but rather based on on-chain analysis.
Support and resistance levels here are defined based on the density of investors’ cost bases. The “cost basis” here refers to the average price at which an investor purchases their coins on the blockchain.
Whenever the spot price interacts with a holder’s cost base, the holder may be more likely to make a move. The investor’s reaction depends on the surrounding price trend.
If the price of bitcoin was previously below the holder’s cost basis (meaning it was in a losing state), the rallying asset could tempt the investor to sell as they may fear their coins will go back to suffer losses. , so leaving at breakeven would seem the best option.
On the other hand, if the price retests the cost base from above, the investor may decide to accumulate more, thinking that if he was able to make a profit with a previous purchase at the same level, he could do so once. further.
Naturally, not all investors think like this, but if there are price ranges in which a large number of coins have been purchased, behavior like this can become visible on non-negligible scales.
The chart below shows what the various ethereum price ranges look like right now based on the density of the cost bases they host:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Ethereum-could-see-a-sharp-drop-if-it-closes-below.jpeg" alt="ethereum On-Chain Support” width=”2352″ height=”874″ loading=”lazy”/>
The various eth resistance and support levels according to on-chain data | Source: @ali_charts on X
In the chart above, the larger the circle of a price range, the more ethereum address cost bases lie within it. As mentioned above, levels that are particularly dense are more likely to show reactions to new testing of the spot price. This means that large circles above the price can act as resistance, while those below can provide support.
From the chart, you can see that ethereum‘s current price range only has modest on-chain support, while the higher levels are quite dense with cost bases, so a move up would face a potentially large amount. of resistance.
What’s worse, however, is the fact that the levels below the current range are quite tight, implying that there isn’t much support down there.
“Stay tuned, as a daily close below $1,530 could indicate a strong correction for eth,” warns the analyst.
eth price
ethereum is currently trading around the $1,575 mark, meaning it is not that far from the $1,530 level where support would end.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/1i6T43Zd/" alt="ethereum price chart” width=”1534″ height=”869″ loading=”lazy”/>
eth has seen some decline in the last few days | Source: ETHUSD on TradingView
Featured image by DrawKit Illustrations on Unsplash.com, Charts by TradingView.com, IntoTheBlock.com
