Ethereum at Risk: Analyst Details Potential Factors for Plunge to $1,800

An expert has detailed the potential consequences for Ethereum should it fail to maintain a crucial on-chain demand area, warning of a possible plummet to as low as $1,800.

Ethereum is currently undergoing a critical phase as it retests a significant on-chain support zone. Analyst Ali Martinez, in a recent analysis on X, delves into the current state of Ethereum’s investor cost basis distribution using data sourced from market intelligence platform IntoTheBlock.

Illustrated in the provided chart are dots representing the quantity of ETH most recently purchased within corresponding price brackets. Notably, the $2,292 to $2,359 range stands out due to the substantial dot size, indicating significant buying activity within this price range.

Approximately 52.3 million ETH was procured by 1.9 million addresses in this range. With Ethereum presently revisiting this range, investors within it would essentially break even on their investments.

Investors typically attach importance to their cost basis, making them more inclined to take action when a retest occurs. Conversely, ranges with fewer holders’ acquisition levels may not significantly impact the broader market during a retest.

In the case of extensive demand zones like the aforementioned Ethereum range, a retest could trigger noticeable price fluctuations. The impact of a retest on a large demand zone is largely influenced by investor psychology. Retests from above, involving investors previously in profit, often lead to a buying response in the market.

Should Ethereum successfully retest the $2,292 to $2,359 range, it could find support and potentially rebound. However, a breach below this demand zone could spell trouble for the cryptocurrency’s price. The ranges below this zone feature the cost basis of a limited number of investors, potentially unable to halt a further decline in the asset.

The analyst cautions that if this crucial demand zone is breached, Ethereum could experience a sell-off, driving its price towards $1,800. Such a decline from the current price would equate to a substantial 21% crash for the coin.

The future trajectory of Ethereum’s price and the resilience of the on-chain support zone are now under scrutiny. Ethereum is currently trading at $2,300 after retracing its recent gains, positioning it within the pivotal price range.