Ethereum Has Two Major Support Centers Just Below Current Price

The market intelligence platform IntoTheBlock has revealed how Ethereum has built up strong on-chain demand zones that should keep it afloat above $4,000.

Market intelligence platform IntoTheBlock has unveiled how Ethereum has established strong on-chain demand zones that are expected to sustain its price above $4,000.

In a recent post on X, IntoTheBlock analyzes the on-chain demand zones for Ethereum. The analytics firm shares a chart that showcases the supply last purchased by investors at price ranges close to ETH's current spot price.

According to the chart, the price ranges ahead of ETH's current price have only small dots, indicating that not much of the supply was last bought at those levels.

However, the story differs for the price ranges below, with the $3,772 to $3,892 and $3,892 to $4,011 ranges specifically hosting the cost basis of a significant number of addresses. In total, investors purchased 7.2 million ETH (worth nearly $28.4 billion at the current exchange rate) at these levels.

Demand zones play a crucial role in on-chain analysis due to the typical patterns of investor psychology. For each holder, their cost basis serves as an important level, making them more inclined to take action during a retest.

When this retest occurs from above (indicating that the investor was in profit prior to it), they might decide to purchase more, anticipating that the level will prove profitable again in the near future. Conversely, investors who were in loss just before the retest may fear another decline, leading them to sell at their break-even point.

While these effects are negligible when only a handful of investors are involved in the buying and selling, they can lead to noticeable fluctuations when a large number of holders are impacted.

The aforementioned price ranges satisfy this condition, suggesting that if Ethereum retests them, it could trigger a substantial buying response in the market, ultimately providing support for the cryptocurrency.

Over the past day, Ethereum has briefly dipped into this zone, and it now remains to be seen whether the high demand will propel the coin back above $4,000.

In other news, the Ethereum Exchange Netflow has remained negative since the beginning of this month, IntoTheBlock highlights in another X post.

The Exchange Netflow is an on-chain indicator that tracks the net amount of Ethereum flowing into or out of the wallets linked to centralized exchanges. “Over 400k ETH have flowed out since December 1st, suggesting a trend of accumulation,” the analytics firm notes.

ETH Price at the Time of Writing

At the time of writing, Ethereum is trading around $3,950, up 10% over the last week.