This article is also available in Spanish.
Market intelligence platform IntoTheBlock has revealed how Ethereum has built 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 article on X, IntoTheBlock explained what on-chain demand zones for Ethereum currently look like. Below is the chart shared by the analytics firm that shows how much supply investors have purchased in price ranges close to the current spot value of ETH.
As the chart shows, the upcoming Ethereum price ranges are only associated with small dots, meaning that much of the supply was not last purchased at these levels.
However, it’s different for the price ranges below, with the $3,772 to $3,892 and $3,892 to $4,011 ranges in particular hosting the cost basis for a significant number of addresses. In total, investors purchased 7.2 million ETH (worth almost $28.4 billion at the current exchange rate) at these levels.
Related reading
Demand zones are considered important in on-chain analysis because of the way investor psychology tends to work. For any holder, their cost base is an important level, so they may be more likely to make a decision when a retest takes place.
When this retest occurs from above (i.e. the investor was in profit before this), the holder may decide to buy more, thinking that the level would be profitable again in the near future . Likewise, investors who were in a loss just before the retest may fear a further decline and may therefore sell at their break-even point.
Naturally, these effects do not matter to the market when only a few investors participate in 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 testing them again could produce a significant buying reaction in the market, which would ultimately provide support for the cryptocurrency.
Over the past day, Ethereum has seen a slight decline in this region, so it now remains to be seen whether or not strong demand can push the coin above $4,000.
Related reading
Furthermore, Ethereum Exchange’s net flow has been negative since the beginning of this month, as IntoTheBlock pointed out in another X article.
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 has been distributed since December 1, suggesting an accumulation trend,” notes the analytics firm.
ETH Price
At the time of writing, Ethereum is trading around $3,950, up 10% from last week.
Featured image of Dall-E, IntoTheBlock.com, chart by TradingView.com
