Ether's (ETH) recent rebound to $3,600 has pushed its value above its active realized price, indicating that the average ETH holder is now profitable. This development raises the possibility of a rally towards the $4,000 mark.
However, the price faces potential selling pressure around the $3,800 resistance level, which could delay further upward movement.
Ethereum Trades Above Its Active Cost Basis
Data from Cointelegraph Markets Pro and TradingView indicates that Ether's price surged by 20% to $3,650 on Sunday. This recovery followed a four-month low of $3,957 reached on November 4th.
The rebound was partly attributed to external factors, including a promise of $2,000 tariff dividend payments and optimism surrounding the potential end of the U.S. government shutdown. This upward movement has also propelled ETH above its active realized price, which currently stands at $3,545, according to Glassnode data.
The return of average ETH holders to a profitable state after experiencing unrealized losses provides significant financial relief and signals a potentially bullish outlook for the cryptocurrency.
Historically, when the price has broken above its active realized price after a brief dip below it, such as in January 2024, it has often led to substantial rallies. For instance, in January 2024, after reclaiming this level, Ether rallied 89% from $2,165 to $4,100.
Therefore, maintaining a price above $3,500 is crucial for the bulls to aim for a potential retest of the $4,000 level.
Additional support levels for the ETH/USD pair are identified around $2,870, $2,530, and $1,800, based on Ether's extreme deviation pricing bands.
The ETH Bears Will Defend the $3,800 Level
Analysis of Ether's cost basis distribution data reveals that investors hold approximately 4.2 million ETH with an average cost basis between $3,600 and $3,815. This concentration of holdings creates a potential resistance zone.
This significant accumulation at these price points suggests that a considerable number of investors may look to sell their holdings at breakeven, which could potentially stall Ether's upward momentum.
Traders believe that for ETH to target higher highs above $4,000, it must successfully flip the resistance area between $3,700 and $3,900 into support.
Crypto analyst Ted Pillows commented on X (formerly Twitter) on Tuesday, stating, "$ETH failed to reclaim the $3,700 level and is now going down. In case ETH is able to reclaim the $3,700 level, it’ll tap the $4,000-$4,100 liquidity zone."
Michael van de Poppe noted that the ETH/USD pair "needs to break the $3,800-3,900 area" to initiate a move toward its all-time highs.
Meanwhile, analyst Jelle emphasized the need for bulls to "step in further" and drive the ETH price to $4,000, adding, "The sooner we get back above $4K, the better."
As previously reported, Tom Lee's BitMine significantly accelerated its ETH accumulation last week, adding 110,288 Ether to its $12.5 billion treasury with the objective of holding 5% of the total supply.