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Ethereum Has Two Major Support Centers Just Below Current Price
In a recent post on X, IntoTheBlock discussed how the on-chain demand zones for Ethereum are looking right now. Below is the chart shared by the analytics firm that shows the amount of supply that investors bought at the price ranges near the current spot ETH value.
On-Chain Demand Zones for Ethereum
As is visible in the graph, the price ranges above have only small dots associated with them, meaning not much of the supply was last purchased at those levels.
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 of a significant amount of addresses. In total, investors purchased 7.2 million ETH (worth almost $28.4 billion at the current exchange rate) at these levels.
The Importance of Demand Zones in On-Chain Analysis
Demand zones are considered important in on-chain analysis due to how investor psychology tends to work out. For any holder, their cost basis is an important level, so they can be more likely to make a move when a retest of it occurs.
When this retest occurs from above (i.e., the investor was in profit prior to it), the holder might decide to purchase more, thinking that the level would be profitable again in the near future. Similarly, investors who were in loss just before the retest might fear another decline, so they may sell at their break-even.
Naturally, these effects don’t matter for the market when only a few investors participate in the buying and selling, but visible fluctuations can appear when a large amount of holders are involved.
Conclusion
In conclusion, the on-chain demand zones for Ethereum are strong, with two major support centers just below the current price. This could provide a floor for the cryptocurrency, and a retest of these levels could lead to a sizeable buying reaction in the market.
FAQs
Q: What are the two major support centers for Ethereum?
A: The two major support centers for Ethereum are the $3,772 to $3,892 and $3,892 to $4,011 price ranges.
Q: Why are these levels important?
A: These levels are important because they represent the cost basis of a significant amount of addresses, which could lead to a buying reaction if retested.
Q: What is the current price of Ethereum?
A: At the time of writing, Ethereum is trading around $3,950, up 10% over the last week.
Q: What is the Exchange Netflow for Ethereum?
A: The Exchange Netflow is an on-chain indicator that keeps track of the net amount of Ethereum flowing into or out of the wallets associated with centralized exchanges. As of December 1st, over 400,000 ETH have flowed out, suggesting a trend of accumulation.
