An analyst has explained how losing this on-chain demand zone could cause Ethereum to witness a crash to as low as $1,800.
Ethereum Is Currently Retesting A Major On-Chain Support Zone
In a new on X, analyst Ali Martinez has discussed about how Ethereum is looking like in terms of investor cost basis distribution right now, citing data from the market intelligence platform IntoTheBlock.
Looks like one range particularly stands out in terms of the number of addresses that bought there | Source:
In the above chart, the dots represent the amount of ETH that was last purchased by investors or addresses inside the corresponding price range. As is visible, the $2,292 to $2,359 range stands out in terms of the size of its dot, suggesting that some heavy buying had occurred between these levels.
More specifically, almost 52.3 million ETH was acquired by 1.9 million addresses inside this range. Since Ethereum is currently retesting the range, all these investors would be just breaking-even on their investment.
To any investor, their cost basis is naturally an important level and thus, they may be more prone to making some kind of move when a retest of it happens. For ranges that host the acquisition level of only a small amount of holders, though, any reaction resulting from a retest isn’t anything too relevant for the wider market.
In the case of price ranges that are huge demand zones, however, a retest can cause visible fluctuations in the asset’s price. The aforementioned Ethereum range naturally belongs to this category.
As for how exactly a retest of a large demand zone would affect the cryptocurrency, the answer lies in investor psychology. Retests that take place from above, that is, of investors who were in profit just before the retest, generally produce a buying reaction in the market.
This is because these holders may believe the asset will go up again in the future, so getting to buy more at their cost basis can appear like a profitable opportunity. As Ethereum is currently retesting the $2,292 to $2,359 range, it’s possible it may feel support and find a rebound.
In the scenario that a break under it takes place, however, the cryptocurrency’s price may be in danger. From the chart, it’s apparent that the ranges below this demand zone only carry the cost basis of a small amount of investors, so they may not be able to prevent a further decline in the asset.
“If this demand zone breaks, we could see a sell-off driving ETH toward $1,800,” notes the analyst. A drawdown to this level from the current price would mean a crash of more than 21% for the coin.
It now remains to be seen how the Ethereum price will develop in the coming days and if the on-chain support zone will hold.
ETH Price
After retracing its recovery from the last few days, Ethereum is back at $2,300, which is inside the aforementioned price range.
The price of the coin seems to have plunged over the last 24 hours | Source:
Featured image from Dall-E, IntoTheBlock.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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