IntoTheBlock has explained how Ethereum could challenge its all-time high (ATH) based on the current cost distribution on the chain.
Ethereum Has Little Resistance on the Way to New ATH
In a new post on X, market intelligence platform IntoTheBlock talked about what on-chain cost distribution looks like for Ethereum right now. Below is the graph shared by the analysis firm that breaks down the number of coins investors bought in each price range close to the current one.
Looks like the levels ahead are relatively thin in terms of investor cost basis | Source: IntoTheBlock on X
On the chart, you can see that several ranges below the current spot value of ETH have a large dot associated with them, meaning that a large number of investors bought at those levels, while there is only one dot for higher levels.
For any holder, its cost basis is naturally a level of interest, since a possible retest of it can cause a change in its profit and loss statement. Therefore, every time the price touches the level, they may be more likely to show some type of reaction.
A few investors showing some kind of reaction is not enough to cause visible fluctuations in the market, but when a large number of addresses have their cost base within a narrow range, like those big dots on the chart, a new test can produce a reaction large enough to be relevant.
Exactly how investors might react to a retest of their breakeven depends on the direction from which the retest occurs. Investors who were at losses before the new test may decide to sell out of fear that Ethereum will fall again in the near future.
However, when the retest is done from above, holders may be tempted to believe that the price would rise once again, so they might decide to engage in further accumulation.
Because of these buying and selling effects, large cost base centers below the price are considered support zones, while those above may prove to be resistance blocks.
As it stands, Ethereum has many previous ranges, but only one of the latter type. “With only minor levels of on-chain resistance ahead, ETH appears poised to challenge its previous all-time high,” notes IntoTheBlock.
In other news, the ETH funding rate has seen a rise to a multi-month high recently, as noted by an analyst in a CryptoQuant Quicktake post.
The trend in the ETH Funding Rate over the past year or so | Source: CryptoQuant
The “funding rate” is an indicator that tracks the ratio between open long and short positions in the Ethereum derivatives market. Currently, the indicator has a notable positive value, suggesting the dominance of bullish sentiment.
While some bullish mindset can be positive for rallies, too much of it can be a warning sign. It now remains to be seen whether ETH will be able to continue its operation despite the high funding rate or whether it will observe a cooldown first.
ETH price
At the time of writing, Ethereum is trading at around $3,900, up more than 7% over the past week.
The price of the coin seems to have been stuck in consolidation recently | Source: ETHUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, IntoTheBlock.com, TradingView.com chart
