On-chain data suggests that Ethereum faces substantial resistance at the $3,500 price level as the price retreats from the threshold.

IntoTheBlock shared details on Monday that show the above price point continues to prove tough for Ethereum (ETH) bulls since July 16.

At the time of writing, ETH is hovering around $3,448 and has slipped 1.8% in the past 24 hours, retreating from intraday highs above $3,560. But why is the $3,500 to $3,600 price level likely to be a major supply wall for Ethereum?

Per IntoTheBlock, the main factor aiding bears around this zone is the 3.13 million Ethereum addresses that purchased the coins. In total, these addresses snapped more than 1.56 million ETH at prices at the average price purchase price of $3,547.

ETH addresses in loss could sell

While the overall sentiment is bullish for crypto, the potential that addresses acquired coins at or above the $3,500 level may fancy break-even or profitable trades.

“These addresses are holding at a loss, adding to the selling pressure and making it difficult for ETH to break through this key level,” analysts at the on-chain data and market intelligence platform said.

Also notable is that 84% of ETH holders are currently profitable, with about 5% at the money and only 11% out of the money. However, positive sentiment is still tinged with a bearish signal from the derivatives market, where the futures momentum gauge reads bearish with a value of -0.5.

Ethereum spot ETFs could be a factor

Despite Ethereum’s price struggling at the current level, the market is more bullish as it awaits the debut of spot ETH ETFs.

After issuers filed final S-1 registration statements last week, including details such as fees, the trading debut will be this week. Experts have pointed to a potential launch on July 23.

Recently, analyst Rekt Capital noted a macro bull flag for Ethereum, highlighting that this pattern indicates trend continuation. This means the $4,000 threshold may not be out of reach for bulls much longer.

Crypto analyst Moon Carl pointed to a bullish inverse head-and-shoulder pattern on July 21. If this pattern plays out, the analyst believes ETH can target $4,300 in the short term.

On the downside, the immediate support level is around the $3,449 to $3,390 range.

Ethereum has seen increased exchange activity as investors wait for the spot exchange-traded funds to start trading in the United States.

According to data provided by Santiment, the amount of Ethereum (ETH) flowing into centralized and decentralized exchanges rallied by 116% in the past 24 hours — rising from 118,970 to 257,550 tokens.

This movement is usually expected in bearish market conditions, but the approval of spot ETH ETFs has triggered a quite similar on-chain momentum since traders might be eying short-term profits.

Data from the market intelligence platform shows that the Ethereum exchange outflow also witnessed a 69% surge over the past day — rising from 121,460 to 205,460 tokens. While the outflow hints at an accumulation trend, the rallying inflows show potential short-term profit-taking.

Per data from Santiment, the total amount of ETH supply sitting on exchanges increased by 1.2 million coins over the past 30 days — rising from 18.41 million ETH on June 24 to 19.61 million ETH at the reporting time.

This was majorly due to the market-wide bearish momentum that brought the Ethereum price down from the $3,500 mark to around $2,800 in the first week of July.

On the other hand, long-term Ethereum holders stopped moving their assets after a busy Monday, July 22. According to Santiment, the five-year dormant ETH circulation plunged from 16,888 to 3,022 coins over the past day.

At this point, five-year ETH holders remain bullish on the second-largest cryptocurrency thanks to the spot ETH ETF green light from the U.S. SEC. Per the crypto.news report, the investment products are set to start trading today, July 23.

Ethereum is up by 1.3% in the past 24 hours and is trading at $3,530 at the time of writing. The asset’s market cap is sitting at $424.3 billion with a daily trading volume of $21.5 billion.