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Market intelligence platform IntoTheBlock revealed how Ethereum has built strong on-chain demand zones that should keep it afloat above $4,000.
Ethereum has two major support positions just below the current price
In new mail On X, IntoTheBlock discussed what Ethereum’s on-chain demand zones look like right now. Below is the chart shared by the analytics firm that shows how much supply investors have bought at price ranges near the current spot value of ETH.
As can be seen in the chart, Ethereum’s forward price ranges only have small dots associated with them, meaning that not much supply was last purchased at those levels.
It varies for the price ranges below, with the $3,772 to $3,892 and $3,892 to $4,011 hosting ranges being particularly cost-effective for a large number of addresses. In total, investors bought 7.2 million Ethereum (worth approximately $28.4 billion at the current exchange rate) at these levels.
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Demand zones are important in on-chain analysis because of how investor psychology works. For any holder, its cost basis is an important level, so it is likely to make a move when a retest occurs.
When this retest occurs from above (i.e. the investor was making a profit before), the holder may decide to buy more, believing that the level will be profitable again in the near future. Likewise, investors who were at a loss just before the retest may fear another decline, so they may sell at breakeven.
Naturally, these effects do not matter to the market when only a few investors are involved in buying and selling, but pronounced fluctuations can appear when a large number of stockholders are involved.
The above price ranges meet this condition, so a retest of Ethereum could trigger a significant buying reaction in the market, which could ultimately provide support for the cryptocurrency.
Over the past day, Ethereum has seen a slight decline in this area, so it now remains to be seen whether or not high demand can push the coin above $4,000.
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In some other news, Ethereum Exchange net flow has been negative since the beginning of this month, as IntoTheBlock noted in another mail.
Exchange Netflow is an on-chain indicator that tracks the net amount of Ethereum flowing into or out of wallets linked to centralized exchanges. “More than 400,000 ETH have flowed since December 1, indicating an accumulation trend,” the analytics firm notes.
Ethereum price
At the time of writing, Ethereum is trading at around $3,950, up 10% from last week.
Featured image by Dall-E, IntoTheBlock.com, chart from TradingView.com