Recent data reveals that just 61% of Ethereum holders are currently experiencing profits, marking a significant decrease amid the latest market downturn. Let’s explore how this situation compares to previous bear markets.
Recent Decline in Ethereum Holder Profitability
A recent update from the market analytics platform IntoTheBlock highlights the current state of profitability among Ethereum investors. The key indicator discussed is the “Historical In/Out of the Money,” which differentiates between ETH holders who are making profits, operating at a loss, or breaking even.
This metric analyzes transaction records on the Ethereum blockchain to identify the average purchase price that each wallet paid for its Ethereum. If a wallet’s buying price is less than the current market value, that holder is considered “in the money,” signaling a profit.
In contrast, wallets that have purchased Ethereum at higher prices than its current value are categorized as “out of the money,” reflecting a loss. If the acquisition price matches the current market price, these holders are deemed “at the money,” indicating a break-even situation.
Below is a chart illustrating the trends of Ethereum’s profitability over recent years:
The chart indicates that the proportion of Ethereum wallets in profit surged above 90% during the earlier price rally this year. However, following a bearish trend in recent months, this percentage has dramatically declined to roughly 61%, a significant drop from earlier highs.
Typically, when many investors are in profit, the likelihood of them selling increases, which can trigger a mass sell-off. Therefore, historical peaks in prices have often occurred when the percentage of profitable addresses was high.
Conversely, market lows have generally formed when a large number of investors are at a loss, indicating that profit-seeking sellers are running out of momentum.
With Ethereum’s indicator now at 61%, it’s worth considering whether this drop could signal a potential bottom for the cryptocurrency, drawing insights from historical patterns.
Analysis from the firm suggests that during the 2022 bear market, the profitability metric hit a low around 46%. Comparatively, the 2018 bear market saw even lower levels, dipping to about 3%. Notably, the recovery period following the latter also briefly revisited lows below 10%, reflecting a similar pattern to the bear’s previous lows.
This raises the possibility that if the current downturn resembles past mid-cycle corrections, Ethereum’s profitability might approach levels seen during prior bear markets, around the 46% mark.
Current ETH Price
To start the week, Ethereum’s price has decreased to $2,300 after maintaining levels above $2,400 over the weekend.
