Ethereum nears $4K as profit-taking risks rise with new address growth

Ethereum (CRYPTO:ETH) has reached a seven-month high, approaching the $4,000 resistance level, amid mixed signals from the market, according to recent data and analysis.

Approximately 94% of the circulating Ethereum supply is currently in profit, a figure close to the 95% threshold that historically signals a market top.

When profitable supply crosses this level, it often precedes a price correction as investors begin to take profits, potentially resulting in a pullback that could slow the token’s upward momentum.

Despite this risk, the number of new Ethereum addresses has increased by 13% in the past ten days, rising from 119,184 to 135,532, which may provide support to the price by attracting additional demand.

At present, Ethereum trades near $3,872, maintaining support around $3,742.

If Ethereum manages to break above the $4,000 resistance with sustained volume, it could extend gains towards $4,425, signalling a possible continuation of the bullish trend.

On the other hand, failure to hold the support below $3,742 could lead to declines, with potential drops to $3,530 or even $3,131, erasing recent advances and undermining short-term bullish sentiment.

Analyst data from sources such as Santiment and Glassnode underpin these insights, showing the interplay between profit concentration and growing user activity on the network.

This balance of factors illustrates a complex macro momentum situation for Ethereum, where profit-taking pressures may face counterweights from ongoing participation by new investors.

At the time of reporting, ETH price was $3,786.98.