On-chain data shows that Ethereum does not face any significant resistance until the level of $3,417, which could pave the way for this target.
The Ethereum cost basis distribution shows that the resistance ahead is spreading out more.
In a recent post on X, the on-chain analytics company Glassnode talked about how the cost basis distribution is currently seeking Ethereum. "Cost basis distribution" is an indicator that tells us how much of the asset supply was last purchased at what price.
First, here is the chart showing the latest breakthrough of the cryptocurrency from this indicator's perspective:
As shown in the chart above, Ethereum has managed to break through a few notable supply levels with its latest price surge. Both the $2,700 and $2,740 levels maintain a cost basis of about 1.3 million ETH, while the $2,760 mark holds a cost basis of 800,000 ETH. In on-chain analysis, levels concentrated with supply are considered important, simply due to the fact that investors are likely to react to price interactions with their cost basis.
When this retest occurs from below, holders may react by selling their coins. Investors at a loss may desperately want to return to green prices, so when the price returns to breakeven, they may panic and exit out of fear of sinking back down in the near future.
Naturally, the more investors share their cost basis at a specific level, the stronger this selling reaction tends to be. Therefore, levels above that hold a significant amount of supply can act as resistance barriers to the price of ETH. Ethereum had previously been stuck below the aforementioned supply zones for a month, likely due to this resistance effect, but now, the cryptocurrency has finally reclaimed them.
Just as the strong levels above can create resistance, the levels below could become support centers. Thus, it is likely that the role of the supply walls at $2,700, $2,740, and $2,760 will now change. Glassnode notes that "These investors have accumulated during the consolidation and are now likely to form a strong support zone."
The support effect could arise from optimistic holders who see their cost basis drop as a buying opportunity when prices drop or simply from their desire to protect their buy-in boundary.
Here is another chart shared by the analytics company showing what the Ethereum cost basis distribution looks like at the latest spot price levels:
From the chart, it can be seen that the price levels ahead have Ethereum supply distributed in a more even manner, with no strong clusters until the level of $3,417. More specifically, price levels before this mark contain 200,000 to 400,000 ETH at each $50 interval. In comparison, the $3,417 level currently holds a cost basis of approximately 607,950 ETH.
Glassnode explains: "If the support range of $2,700–$2,760 holds, then technically, the path to $3,420 remains open - but the reaction from holders in the $2,800–$3,300 range will determine the speed of ETH's price increase - currently, the price has risen 47.5% QTD."
