Market intelligence platform IntoTheBlock revealed how Ethereum has established a strong on-chain demand zone that should keep its price above $4,000.
Ethereum has two major support centers below its current price
In a new post on X, IntoTheBlock discusses where Ethereum’s on-chain demand zone currently stands. Below is a chart shared by the analytics firm showing the supply that investors are buying in a price range close to the current spot ETH value.
As shown in the chart, Ethereum’s future price range is only related to small points, which means that not much supply was bought at these levels last time.
However, the situation is different in the following price ranges, especially the $3,772 to $3,892 and $3,892 to $4,011 ranges which host a large number of addresses’ cost basis. In total, investors purchased 7.2 million ETH (worth nearly $28.4 billion at current exchange rates) at these levels.
Demand areas are seen as an important factor in on-chain analysis as investor psychology tends to come into play. For any holder, their cost basis is an important level, so they are more likely to take action when the cost basis is retested.
When a retest occurs from above (i.e. investors took profits before it), holders may decide to buy more, thinking that the level will be profitable again in the near future. Likewise, investors who lost money before the retest may fear another drop, so they may sell at the breakeven point.
Of course, these effects are not significant to the market when only a few investors are involved in buying and selling, but when a large number of holders participate, significant fluctuations can occur.
The aforementioned price ranges satisfy this condition, so Ethereum retesting them could generate a sizeable buying reaction in the market, ultimately lending support to the cryptocurrency.
Ethereum has fallen slightly in this area over the past day, so it now remains to be seen if high demand can push Ethereum back above $4,000.
In some other news, as IntoTheBlock pointed out in another X post, Ethereum exchange net flows have been negative since the beginning of the month.
Exchange Netflow is an on-chain metric that tracks the net amount of Ether flowing into or out of wallets associated with centralized exchanges. The analytics firm noted that “over 400,000 ETH has flowed out since December 1, indicating an accumulation trend.”
ETH Price
At the time of writing, Ethereum is trading around $3,950, up 10% from last week.
