The analyst explained that the loss of this demand zone on the blockchain could cause Ethereum to drop as low as $1,800.

Ethereum is currently retesting the major on-chain support zone

In the recent fasting Analyst Ali Martinez discussed the current situation of Ethereum in terms of the distribution of investment costs on program X, citing data from market analysis platform IntoTheBlock.

In the above chart, the dots represent the amount of ETH that was recently purchased by investors or addresses in the respective price range. As you can see, the range from $2,292 to $2,359 stands out in terms of the size of the dot, suggesting that some huge buying took place between these levels.

Specifically, almost 52.3 million ETH were acquired by 1.9 million addresses in this range. Since Ethereum is currently retesting the range, all of these investors would have reached breakeven on their investment.

For any investor, their cost base is naturally an essential level, and so they may be more likely to make a move when it retests. However, in ranges where the takeover level is only a compact number of holders, any reaction from a retest is not significant to the broader market.

In the case of price ranges, which are huge demand zones, however, retesting can cause perceptible fluctuations in the asset price. The aforementioned Ethereum range naturally falls into this category.

As for how exactly a retest of a major demand zone would affect the cryptocurrency, the answer lies in investor psychology. Retests that come from above, meaning investors who were in profits just before the retest, tend to trigger a buying reaction in the market.

This is because holders may believe that the asset will rise again in the future, so buying more at its base cost may seem like a profitable opportunity. Since Ethereum is currently retesting the $2,292 to $2,359 range, it is possible that it will feel support and find a rebound.

In a scenario where a breakout occurs, the price of the cryptocurrency could be at risk. From the chart, it is clear that ranges below this demand zone only cover the cost base of a compact number of investors, so they may not be able to prevent the asset from falling further.

“If this demand zone is broken, we could see a sell-off that would push ETH towards $1,800,” the analyst notes. A drop to that level from its current price would mean a crash of over 21% for the coin.

The question now is how the Ethereum price will develop in the coming days and whether the support zone on the blockchain will hold.

ETH Price

After recouping losses from the past few days, Ethereum has returned to the $2,300 level, which is within the above-mentioned price range.

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