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Ethereum price is approaching the psychological level of $4,000 – what will happen next?
Ethereum continues to rise strongly, with the current price reaching the highest point in 7 months at $3,745. In the past week, the altcoin surged by 27%, as investors actively increased their holdings of ETH, driving its strong upward momentum.
Despite the market showing strong signs of growth, this rapid pace of growth is pushing Ethereum towards a saturation point, which may determine its next trend.
Ethereum investors significantly increase holdings
Since early July, the exchange's Ether balance has decreased by more than 317,000 ETH. This amount is worth over 1.18 billion USD, reflecting a large-scale withdrawal by investors, thereby reducing the available supply. The price drop indicates strong market confidence that prices will continue to rise.
Due to demand exceeding supply, this accumulation trend is driving the rise of ETH. Such an aggressive trend indicates that many market participants believe ETH may soon break through $4,000, which will bring more bullish pressure to its price movement.
Exchange Ethereum balance. Source: Glassnode
The network value to transaction volume (NUPL) ratio of Ethereum is currently approaching the "belief-disbelief" zone. This indicator can signal whether investors are in profit and helps to identify potential reversal areas. Historically, whenever the NUPL enters this zone, the price of Ethereum tends to undergo a short-term adjustment.
Belief - the level of denial often acts as a saturation point, where optimistic investors begin to take profits. If Ethereum breaks through $4,000, this psychological level may trigger significant selling pressure. This pattern has been repeating constantly over the past 16 months, and if the bullish trend of ETH continues without correction, this pattern may repeat itself.
The price of ETH may not rise significantly.
As of the writing of this article, the trading price of Ethereum is $3,745, just 6.8% away from the $4,000 mark. This level was a strong psychological resistance during the previous bull market. The current rebound momentum places ETH in a solid position to test this resistance level in the coming days.
However, if the market enters a profit-taking phase, Ethereum may not be able to break through $4,000. The resulting pullback could lead to a price drop to $3,530. Losing this support level could cause a decline to $3,131, erasing recent gains and confirming the beginning of a short-term reversal.
ETH price analysis. Source: TradingView
On the other hand, if the accumulation continues to dominate, the bearish outlook for Ethereum may become invalid. A breakthrough of 4,000 will support the ongoing pump, allowing ETH to reach new highs.
This situation largely depends on the strength of investor confidence and broader market cues.