But despite ETH demonstrating strong technical momentum and entering price discovery, on-chain analysis finds that its support is “narrower” than Bitcoin.
Simply put, ETH faces a bigger risk of seeing a deeper pullback than Bitcoin in the foreseeable future, if the market turns around.
Why does Ethereum have a weaker support area than Bitcoin
Phillip Gradwell, the chief economist at Chainalysis, said that ETH price has narrower support near its record high compared to Bitcoin.
If the market corrects, the next major ETH support level, is around $1,800, Gradwell noted.
Based on the accumulation trend of ETH, Gradwell explained that the strongest level of demand is at $1,800. He said:
“The Ethereum price reached a new all time high this week but cost curve analysis suggests the peak Ethereum price has a narrower base of support than the peak bitcoin price, with the next strongest level of observed demand for Ethereum at $1,800.”
Gradwell used a data point called “the USD cost of Ethereum held” — which is similar to whale clusters for Bitcoin — to estimate at which price level investors accumulated ETH.
If the $1,800 support level gets broken and the market sees a sizable correction, the economist said that $1,500 is a “particularly strong” next level of support for ETH.
A drop to $1,500 would mean ETH would see a 30% drop from the current price of around $2,100.
Historically, 30% pullbacks occurred frequently during bull cycles, but in the recent cryptocurrency market uptrend, there has not been many 20% to 30% pullbacks compared to the run-up in 2017.
Nonetheless, Gradwell emphasized that $1,500 is the macro support level for ETH in the short to medium term. He added:
“The ETH market has changed radically in recent months, with a…