Compared with bitcoin’s (BTC) rally to a record price above $61,000 in March, ether’s latest bull run to an all-time high over $2,100 was supported by scantier demand from buyers, according to a top blockchain-data analyst. 

Philip Gradwell, chief economist at Chainalysis, said on CoinDesk TV’s "First Mover" show that “relatively little” ether (ETH) was bought at prices above $1,850 and even less was bought at $2,000 or above.

“The reason why this is important is because the price that people are willing to buy and hold at tells us the level of demand that there is at that price level,” Gradwell said. “So not a huge amount of demand at that $2,000 price.”

As of April 5, blockchain data showed there was significant ether accumulation at prices around $1,800, Gradwell wrote this week in a newsletter. That price level is likely to provide strong support because the cost of acquisition indicates historical demand for a cryptocurrency at different price levels. The analysis assumes that the buyers are unlikely to sell their crypto asset at prices below their cost of acquisition.

Only about 700,000 ETH were acquired at or above $1,850, costing around $1.4 billion on April 5, three days after ether logged a new all-time high price, Gradwell wrote. By contrast, on March 29 – two weeks after bitcoin's price peaked – 238,000 BTC costing about $14 billion were acquired at or above $57,000.

The latest “all-time high [ether] price of $2,151 was some way above a large level of support, and suggests that the peak was driven by a relatively small amount of demand,” Gradwell wrote. “This is in contrast to bitcoin, which had greater prior demand across high price levels.”

The chart below, from Gradwell’s newsletter on April 1, also shows that 0.1 million bitcoin were acquired at prices higher than the spot price on March 29:

The exercise highlights the limits of using blockchain data to analyze market movements: While the data can offer extra transparency, helping investors and traders understand where cryptocurrency is moving on the networks, the data can also be misleading, relying on humans for the interpretation as well as assumptions about investor psychology. .

Gradwell said on CoinDesk TV that his analysis included some potential “downward biases,” which could skew ether’s supporting price level on the lower end.

The analysis didn’t capture the prices of sales and trades made on centralized exchanges. 

But Gradwell argued that with the increased shift of ether trading to decentralized finance (DeFi), which is trackable on the blockchain, he is “not worried about such downward bias.”

At the same time, Gradwell’s analysis also flattens the cost curve of entities that acquired ether at different prices, which may skew the supporting price level lower.

“Large entities, such as DeFi contracts, tend to hold lots of ETH acquired at both low and high costs,” he wrote in the newsletter. “For example, 7.4 million ETH with an average cost of acquisition of $1,818 is held in the wrapped ether contracts.”

On the upward bias side, CoinDesk’s Lawrence Lewitinn said on the CoinDesk TV show that Gradwell’s analysis is based on an assumption that people would not sell their ether at a loss. If ether holders are willing to sell their ether at a loss, it means that the $1,800 supporting level may be less strong than expected.

Gradwell said a majority of investors who bought ether at its peak price in 2018 sold their ether at a loss, while more bitcoin holders at the time continued to hold their bitcoin throughout the bear market.

“The persistence of a small, but very bullish, cohort of ether buyers supports my concern that the highest ether prices tend to have a narrow base of support, at least compared to bitcoin,” Gradwell wrote.