Market intelligence platform IntoTheBlock has revealed how Ethereum has built robust on-chain demand zones that should keep it above $4,000.

Ethereum has two main support centers just below the current price

In the modern one post on X IntoTheBlock discussed what on-chain demand zones currently look like for Ethereum. Below is a chart provided by the analyst firm that shows the amount of supply that investors have purchased at price ranges close to the current ETH spot value.

As you can see in the chart, Ethereum’s future price ranges only have compact dots assigned to them, meaning that a compact portion of the supply has recently been purchased at these levels.

However, this is not the case with the price ranges below, where the price ranges are $3,772 to $3,892 and $3,892 to $4,011, especially when serving a significant number of addresses on a cost basis. In total, investors purchased 7.2 million ETH (worth almost $28.4 billion at current exchange rates) at these levels.

Demand zones are considered crucial in supply chain analysis because of how investor psychology typically works. Cost basis is an crucial level for any holder, so they may be more likely to make a move when it is retested.

When such a retest occurs from above (meaning that the investor has previously made a profit), the holder may decide to purchase more, believing that this level will be profitable again in the near future. Similarly, investors who have experienced a loss just before a retest may be afraid of another decline, so they may sell after reaching break-even.

Of course, these effects do not matter to the market when only a few investors are involved in buying and selling, but observable fluctuations can occur when a huge number of holders are involved.

The above-mentioned price ranges meet this condition, so it is possible that Ethereum testing them again would trigger a significant buying reaction in the market, which would ultimately provide support for the cryptocurrency.

Ethereum has seen a slight decline in this region over the past day, so it now remains to be seen whether the high demand can push the coin above $4,000 or not.

In other news, Ethereum Exchange Netflow has been negative since the beginning of this month, as spotted by IntoTheBlock in another X post.

Exchange Netflow is a network indicator that tracks the net amount of Ethereum flowing into or out of wallets associated with centralized exchanges. “Over 400,000 have flowed since December 1. ETH, which suggests an accumulation tendency,” notes the analytical company.

ETH price

At the time of writing, Ethereum is trading around $3,950, up 10% from last week.

Featured image from Dall-E, IntoTheBlock.com, chart from TradingView.com