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Market intelligence platform IntoTheBlock has revealed how ethereum has created strong on-chain demand zones that should keep it afloat above $4,000.
ethereum has two major support centers just below the current price
in a new <a target="_blank" href="https://x.com/intotheblock/status/1868937294629290493″ target=”_blank” rel=”nofollow”>mail At x, IntoTheBlock has discussed what the on-chain demand zones look like for ethereum right now. Below is the chart shared by the analytics firm showing how much supply investors bought in price ranges close to the current spot value of eth.
As you can see from the chart, the ethereum price ranges ahead only have small points associated with them, meaning that not much of the supply was last purchased at those levels.
However, it is different for the price ranges below, 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 purchased 7.2 million eth (worth almost $28.4 billion at current exchange rates) at these levels.
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Demand zones are considered important in on-chain analysis because of how investor psychology tends to work. For any incumbent, your cost base is an important level, so you're more likely to make a move when it's retested.
When this retest occurs from above (i.e. the investor took profits earlier), the holder might decide to buy more, thinking that the level would become profitable again in the near future. Similarly, investors who were at losses just before the retest might fear another drop, so they might sell at their breakeven point.
Naturally, these effects do not matter for the market when only a few investors participate in the buying and selling, but visible fluctuations can appear when a large number of holders are involved.
The aforementioned price ranges satisfy this condition, so it is possible that ethereum, upon retesting them, will produce a major buying reaction in the market, which would end up providing support to the cryptocurrency.
Over the past day, ethereum has seen a slight decline in this region, so it now remains to be seen whether the high demand can push the coin back above $4,000 or not.
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In other news, ethereum Exchange Netflow has been negative since the beginning of this month, as IntoTheBlock noted in another x <a target="_blank" href="https://x.com/intotheblock/status/1868704841339408541″ target=”_blank” rel=”nofollow”>mail.
Exchange Netflow is an on-chain indicator that tracks the net amount of ethereum flowing into or out of wallets associated with centralized exchanges. “More than 400,000 eth have left since December 1, suggesting an accumulation trend,” notes the analysis firm.
eth price
At the time of writing, ethereum is trading around $3,950, up 10% from the last week.
Dall-E Featured Image, IntoTheBlock.com, TradingView.com Chart
