Ethers Record Run Came With Less Support Than Bitcoins, Blockchain Analysis Shows

Friday 09 April 2021, 7:03 AM AEST - 2 weeks ago

Compared with bitcoins (BTC) rally to a record price above $61,000 in March, ethers latest bull run to an all-time high over $2,100 was supported by scantier demand from buyers, according to a top blockchain-data analyst.

Philip Gradwell, chief economist at Chainalysis, said on CoinDesk TVs First Mover show that relatively little ether (ETH) was bought at prices above $1,850 and even less was bought at $2,000 or above.

The reason why this is important is because the price that people are willing to buy and hold at tells us the level of demand that there is at that price level, Gradwell said. So not a huge amount of demand at that $2,000 price.

Source: Chainalysis

As of April 5, blockchain data showed there was significant ether accumulation at prices around $1,800, Gradwell wrote this week in a newsletter. That price level is likely to provide strong support because the cost of acquisition indicates historical demand for a cryptocurrency at different price levels. The analysis assumes that the buyers are unlikely to sell their crypto asset at prices below their cost of acquisition.

Only about 700,000 ETH were acquired at or above $1,850, costing around $1.4 billion on April 5, three days after ether logged a new all-time high price, Gradwell wrote. By contrast, on March 29 – two weeks after bitcoins price peaked – 238,000 BTC costing about $14 billion were acquired at or above $57,000.

The latest all-time high [ether] price of $2,151 was some way above a large level of support, and suggests that the peak was driven by a relatively small amount of demand, Gradwell wrote. This is in contrast to bitcoin, which had greater prior demand across high price levels.

The chart below, from Gradwells newsletter on April 1, also shows that 0.1 million bitcoin were acquired at prices higher than the spot price on March 29:

Source: Chainalysis

The exercise highlights the limits of using blockchain data to analyze market movements: While the data can offer extra transparency, helping investors and traders understand where cryptocurrency is moving on the networks, the data can al ...

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