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