Ethereum's price has shown resilience above $4,000 due to a strong on-chain demand, according to market intelligence platform IntoTheBlock.
The platform has identified two support zones just below the current trading price that are expected to play a crucial role in maintaining investor confidence and market stability.
These support zones, ranging from $3,772 to $3,892 and $3,892 to $4,011, have seen significant investor interest, with approximately 7.2 million ETH, valued at nearly $28.4 billion, being accumulated at these levels.
These accumulation levels indicate a psychological barrier for investors and can influence their decision-making during market fluctuations.
Understanding demand zones is important in analyzing on-chain data as they reflect the collective psychology of investors.
When Ethereum's price approaches these established levels, it can trigger different reactions among holders.
Those who bought at lower prices may be encouraged to make additional purchases, anticipating a return to profitability.
On the other hand, investors who are at a loss may be inclined to sell at their break-even point, fearing further declines.
The dynamics of these demand zones become more significant when a large number of holders are involved, as a substantial buying reaction during a retest can provide the necessary support to push Ethereum back above the $4,000 threshold.
In addition to analyzing on-chain demand, IntoTheBlock has observed a negative trend in Ethereum's Exchange Netflow since the beginning of the month.
This trend indicates that over 400,000 ETH have been withdrawn from exchanges, suggesting a growing inclination among investors to accumulate Ethereum rather than trade it.
This aligns with the broader market sentiment that Ethereum's price may stabilize and even rise, given the strong support levels identified in the on-chain analysis.
As of the latest reports, Ethereum is trading around $3,950, reflecting a 10% increase over the past week.
This upward momentum is significant, especially considering the recent dip into critical demand zones.
The interplay between on-chain demand and exchange netflow trends indicates a market that is resilient and potentially poised for growth.
The ability of Ethereum to maintain its position above $4,000 will depend on the collective actions of investors in response to price movements.
The established support zones, combined with the trend of accumulation, suggest that Ethereum has a solid foundation to withstand market volatility and continue its upward trajectory.