IntoTheBlock explained how Ethereum could challenge its all-time high (ATH) based on the current on-chain cost distribution.
Ethereum has little resistance on the way to the new ATH
In a new article on X, market intelligence platform IntoTheBlock explained what the on-chain cost breakdown for Ethereum currently looks like. Below is the chart shared by the analytics firm that details how many coins investors purchased in each price range near the current one.
Looks like the levels ahead are relatively thin in terms of investor cost basis | Source: IntoTheBlock on X
On the chart, it is visible that several ranges below the current spot value of ETH are associated with a large point, which means that a large number of investors bought at these levels, while it did not There is only one such point for higher levels.
For any holder, their cost basis is naturally a level of interest, as a potential retest of it may lead to a reversal of their profit-loss status. So each time the price hits the level, they may be more inclined to show some sort of reaction.
A few investors showing any reaction isn’t enough to cause visible fluctuations in the market, but when a large number of addresses have their cost basis in a narrow range, as in these large dots on the chart, retesting can produce a reaction important enough to be relevant.
Exactly how investors might react to a retest of their breakeven point depends on the direction in which the retest takes place. Investors who were in losses before the retest may decide to sell, fearing that Ethereum could decline again in the near future.
However, when the retest takes place from above, holders may be tempted to believe that the price would rise once again, and therefore may decide to participate in further accumulation.
Due to these buying and selling effects, significant cost base centers below the price are considered support zones, while those above may prove to be resistance blocks.
As it stands, Ethereum has many old ranges, but only one of the latest type. “With only minor on-chain resistance levels ahead, ETH appears poised to challenge its previous all-time high,” notes IntoTheBlock.
Additionally, the ETH funding rate has recently seen an increase to a multi-month high, as noted by an analyst in a CryptoQuant Quicktake article.
The trend in the ETH Funding Rate over the past year or so | Source: CryptoQuant
The “Funding Rate” is an indicator that tracks the ratio between long and short positions open on the Ethereum derivatives market. The indicator currently has a notable positive value, which suggests the dominance of bullish sentiment.
While some bullish mentality can be positive for rallies, too much can be a warning sign. It now remains to be seen whether ETH will be able to continue operating despite the high funding rate or whether it will first observe a cooling period.
ETH Price
At the time of writing, Ethereum is trading at around $3,900, up over 7% over the past week.
The price of the coin seems to have been stuck in consolidation recently | Source: ETHUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, IntoTheBlock.com, chart from TradingView.com
