Analyst Warns Ethereum Could Plunge to $1,800 If Key Level Breaks

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An analyst has pointed out that if this on-chain demand zone is lost, Ethereum may experience a decline to as low as $1,800.

Ethereum Is Currently Reassessing A Key On-Chain Support Zone

In a recent post on X, analyst Ali Martinez discussed Ethereum’s current situation regarding investor cost basis distribution, referencing data from the market intelligence platform IntoTheBlock.

Ethereum Cost Basis — One range stands out noticeably in terms of the number of addresses that made purchases there | Source: @ali_charts on X

The dots on the chart above indicate the amount of ETH last purchased by investors or addresses within the corresponding price range. Notably, the range between $2,292 and $2,359 is significant, as evidenced by the size of its dot, indicating substantial buying activity in this area.

Specifically, around 52.3 million ETH was acquired by 1.9 million addresses within this range. Since Ethereum is currently testing this range again, all of these investors would just be breaking even on their investments.

For any investor, their cost basis represents a crucial level, making them more likely to act when there is a retest. However, in situations where the acquisition level involves only a small group of holders, any reactions to a retest may not significantly impact the broader market.

Conversely, for large demand zones, a retest can lead to noticeable price fluctuations. The Ethereum range in question naturally falls into this category.

Regarding the potential impact of a retest of a significant demand zone on the cryptocurrency, it fundamentally connects to investor psychology. Retests initiated from above—meaning for investors who were in profit just prior—typically produce a buying response in the market.

This occurs because these holders may anticipate that the asset will appreciate again soon, perceiving the opportunity to purchase more at their cost basis as an attractive proposition. As Ethereum is currently retesting the $2,292 to $2,359 range, it could potentially find support and rebound.

However, if there is a breach below this level, the cryptocurrency’s price may face serious risks. The chart indicates that the ranges beneath this demand zone only reflect the cost basis of a minimal number of investors, thus failing to prevent further declines in the asset’s value.

“If this demand zone fails, we might witness a sell-off pushing ETH toward $1,800,” warns the analyst. A drop to this level from the current price would translate to a decline of over 21% for the coin.

It remains to be seen how Ethereum’s price will evolve in the coming days and whether the on-chain support zone will withstand the pressure.