Ethereum Could See A Steep Decline If It Closes Below This Level

Keshav Verma

1 year ago

3 mins read

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On-chain data suggests an Ethereum close under the $1,530 level could lead to a significant drawdown for the cryptocurrency.

Ethereum Support Levels Below $1,530 Are Very Thin Currently

In a new post on X, analyst Ali has discussed what the support and resistance levels of Ethereum are looking like right now. These support and resistance levels aren’t the technical ones, however, but rather ones based on on-chain analysis.

The support and resistance levels here are defined based on the density of investors’ cost bases. The “cost basis” here refers to the average price at which an investor acquires their coins on the blockchain.

Whenever the spot price interacts with a holder’s cost basis, they may be more prone to make a move. How the investor may react depends on the surrounding price trend.

If the Bitcoin price was earlier under the cost basis of the holder (meaning that they were in a state of loss), the asset recovering back to it could tempt the investor into selling, as they may fear that their coins would go into losses again, so exiting at break-even would seem like the better option.

On the other hand, if the price retests the cost basis from above, the investor may decide to accumulate more, thinking that if they were able to go into profits with an earlier buy at the same level, they might be able to do so once more.

Naturally, not all investors think like this, but if there are price ranges where a large amount of coins were purchased, behaviors like this might become visible on non-negligible scales.

The below chart shows how the various Ethereum price ranges look like right now based on the density of cost bases that they host:

The various ETH resistance and support levels according to on-chain data | Source: @ali_charts on X

In the above graph, the larger the circle for a price range, the more Ethereum addresses’ cost bases lie inside it. As mentioned before, levels that are particularly dense are more likely to show reactions to retests from the spot price. This means that large circles above the price can act as resistance, while those below can provide support.

From the chart, it’s visible that the current Ethereum price range has only modest on-chain support, while the higher levels are pretty dense with cost bases, so a move up would face a potentially large amount of resistance.

What’s worse, however, is the fact that the levels below the current range are quite thin, implying that there isn’t much support down there.

“Keep a close watch, as a daily close below $1,530 could signal a steep correction ahead for ETH,” warns the analyst.

ETH Price

Ethereum is currently trading around the $1,575 mark, meaning that it isn’t that far from the $1,530 level where support would end.

ETH has seen some decline in the last few days | Source: ETHUSD on TradingView

Featured image from DrawKit Illustrations on Unsplash.com, charts from TradingView.com, IntoTheBlock.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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