Ethereum (ETH) has climbed to a 7-month high, now approaching the crucial $4,000 mark. While this milestone is seen as a significant psychological resistance, analysts warn that market dynamics may not support a smooth breakout, especially with signs of a potential market top forming.
According to recent data, 94% of ETH’s circulating supply is currently in profit. Historically, when this figure crosses the 95% threshold, it often marks a market peak. This level of profitability suggests that a majority of holders might begin taking profits, possibly triggering a pullback in price.
Such conditions often indicate an overheated market, where bullish momentum has been largely exhausted. As profit-taking increases, selling pressure builds, potentially slowing Ethereum’s upward trajectory.
Read Also: Ethereum Turns 10: Celebrating a Decade of Blockchain Innovation
Ethereum’s On-Chain Activity: Mixed Momentum
One indicator giving hope to bulls is the recent rebound in new Ethereum address creation. After a sharp dip earlier this month, data from Glassnode shows a 13% increase in new addresses over the past 10 days, rising from 119,184 to 135,532.
This metric is often interpreted as a signal of growing user adoption and interest. If new address creation continues to rise, it could act as a counterbalance to the bearish profit-taking signals and offer support for ETH’s price near the $4,000 level.
Key Price Levels to Watch
Ethereum is currently trading around $3,872, with solid support near $3,742. If the price fails to break the $4,000 resistance, analysts suggest ETH could retrace to $3,530, and in a more bearish scenario, even to $3,131, wiping out recent gains.
However, should momentum from new users continue and market sentiment stay strong, ETH could push past the $4,000 mark. A confirmed breakout may send the token toward the $4,425 level, resuming its bullish momentum and invalidating short-term bearish concerns.
Market Outlook
Whether Ethereum breaks out or retreats in the coming days will depend heavily on the balance between new investor demand and existing holders opting to lock in profits.
If address growth strengthens and external macro factors remain stable, Ethereum could defy the historical market-top pattern and enter a fresh rally phase.
The post appeared first on CryptosNewss.com