The Ether (ETH) price is now hovering near its all-time high once more, while bitcoin (BTC) is still significantly far from exceeding its record high at $60,805. However, despite Ether demonstrating some strong technical momentum and entering a price discovery phase, on-chain analysis shows that its support is ‘narrower’ than bitcoin.
Notably, the buying support for ETH/USD near the record high seems to be weaker than that in the bitcoin market. This means that ETH faces a bigger risk of seeing a bigger pullback than BTC in the near and mid-term, in case the market turns around and heads south.
Why Is ETH’s Support Weaker Than BTC’s?
The chief economist at Chainalysis, Phillip Gradwell, said that Ether’s price has smaller support near its record high when compared to Bitcoin. In case the market experiences a pullback, the next notable ETH support level has formed around $1,800.
According to the accumulation trend recorded in the ETH market, Gradwell said that the biggest level of demand is located at $1,800. He mentioned:
“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 known as “the USD cost of Ethereum held” that is similar to whale clusters for bitcoin. He used this method to estimate at what price level investors heavily accumulated ETH.
In case the $1,800 support zone breaks and the market experiences a considerable correction, the economist believes that $1,500 is a strong support level for Ethereum. A plunge to $1,500 might mean that Ethereum would see a 30% plunge from the current price of about $2,100.
Based on historical data, 30% pullbacks happened often during bull runs, but in the recent crypto market uptrend, there has not been a lot of 20% to 30% pullbacks when compared to the run-up in 2017. Nevertheless, Gradwell insisted that $1,500 is the macro support zone for ETH in the near and mid-term. He also said:
“The ETH market has changed radically in recent months, with a significant increase in the cost of acquisition for over 50 million ETH, out of a total supply of 115M. Support at $1,500 is particularly strong, with 33.3M ETH acquired above this level at a total cost of $58 billion.”
One primary reason ETH might have a smaller support base than BTC could be the small number of long-term HODLERs. After the 2017 bull run, Gradwell discovered that a small group of investors held Ether despite seeing major losses.
The economist explained that such a trend supports the worries that ETH has a weaker support base, at least when compared to Bitcoin.
Traders Expect ETH To Rally To New ATH
In the near term, traders appear to expect ETH to see a massive uptrend despite the worries for a narrow support base. One pseudonymous trader by the name “Blunts” said that based on the bottoming out formation on the 4-hour charts, Ether might see another record high before bitcoin. He added:
“Looks like that was the $eth low. At this rate eth will be at ath before btc.”
Previous ATH of 557,592,098,540,542 was observed on 08 April 2021
— glassnode alerts (@glassnodealerts) April 9, 2021
Therefore, both price technical and fundamentals suggest that the momentum of Ether price has a good chance of sustainability in the short term.