IntoTheBlock has explained how Ethereum could challenge its all-time high (ATH) based on the current on-chain cost basis distribution.
Ethereum Has Little Resistance On The Path To New ATH
In a new post on X, the market intelligence platform IntoTheBlock has talked about what the on-chain cost basis distribution is like for Ethereum right now. Below is the chart shared by the analytics firm that breaks down the amount of coins that the investors bought in each price range near the current one.
Looks like the levels ahead are relatively thin in terms of investor cost basis | Source: IntoTheBlock on X
From the graph, it’s visible that several ranges below the current ETH spot value have a large dot associated to them, signifying that a large amount of investors bought at those levels, while there is only one such dot for the levels above.
To any holder, their cost basis is naturally a level of interest, as a potential retest of it can lead to a flip in their profit-loss status. Thus, whenever the price touches the level, they can be more prone to showing some kind of reaction.
A few investors displaying any kind of reaction isn’t enough to cause visible fluctuations in the market, but when a large number of addresses have their cost basis inside a tight range, like in those large dots in the chart, a retest may produce a reaction large enough to be relevant.
How exactly the investors might react to a retest of their break-even mark comes down to the direction from which the retest is occurring. Investors who were in loss prior to the retest may decide to sell in fear that Ethereum would dip back again in the near future.
When the retest takes place from above, though, holders may be tempted to believe the price would go up once more, so they could decide to participate in more accumulation.
Because of these buying and selling effects, large cost basis centers below the price are considered to be support zones, while those above can prove to be resistance blocks.
As it stands, Ethereum has many former ranges, but only one of the latter type. “With only minor on-chain resistance levels ahead, ETH seems ready to challenge its previous all-time high,” notes IntoTheBlock.
In some other news, the ETH Funding Rate has witnessed a spike to a multi-month high recently, as an analyst has pointed out 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 keeps track of the ratio between long and short positions open on the Ethereum derivatives market. The indicator currently has a notable positive value, which suggests the dominance of bullish sentiment.
While some bullish mentality can be positive for rallies, an excess of it can be a warning sign. It now remains to be seen whether ETH will be able to continue its run despite the high funding rate or if 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 from Dall-E, CryptoQuant.com, IntoTheBlock.com, chart from TradingView.com
