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Market intelligence platform IntoTheBlock revealed how Ethereum has built a strong on-chain demand area that could sustain it above $4,000.
Ethereum has two major support centers just below its current price.
In a new post on X, IntoTheBlock discussed what Ethereum’s on-chain demand zone currently looks like. Below is a chart shared by the analytics firm showing how much supply investors have purchased at prices close to the current spot ETH value.
As you can see from the graph, only small dots are involved in the preceding Ethereum price range. This means that not much supply was last purchased at that level.
However, it is different in the price range below. In particular, the $3,772 to $3,892 and $3,892 to $4,011 ranges host cost benchmarks for a significant number of addresses. In total, investors bought 7.2 million ETH (worth about $28.4 billion at current exchange rates) at these levels.
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Demand zones are considered important in on-chain analysis due to how investor sentiment works. Cost basis is at a critical level for all holders, so they may be more likely to move when a retest occurs.
If this retest occurs above (i.e. if the investor was previously profitable), holders may decide to buy more, thinking that the level will become profitable again in the near future. Likewise, investors who take a loss just before the retest may fear another decline and sell to break even.
Naturally, this effect is not significant in the market when only a few investors participate in trading, but when a large number of holders participate, noticeable fluctuations can occur.
The aforementioned price range meets this condition, so it is likely that Ethereum testing it again will create a significant buying reaction in the market and eventually provide support for the cryptocurrency.
Over the past day, Ethereum has seen a slight decline in this region, so now it remains to be seen whether high demand can push the coin above $4,000.
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In other news, Ethereum Exchange Netflow has been negative since the beginning of this month, as IntoTheBlock pointed out in another X post.
Exchange Netflow is an on-chain metric that tracks the net amount of Ethereum flowing into or out of wallets connected to centralized exchanges. “More than 400,000 ETH has been outflowed since December 1, suggesting an accumulation trend,” the analytics firm says.
ETH price
As of this writing, Ethereum is trading at around $3,950, up 10% over the past week.
Dall-E, featured image from IntoTheBlock.com, chart from TradingView.com