Ethereum Holders In Profit Have Registered A Notable Drop Recently
Data from market intelligence platform IntoTheBlock has highlighted a significant decline in the profitability of Ethereum holders. This metric, called "Historical In/Out of the Money," analyzes the percentage of Ethereum addresses that are currently in profit, loss, or break-even.
The process involves reviewing each address's transaction history to find the average price at which it acquired its Ethereum coins. If the cost basis is lower than the current market price, the holder is "in the money." Conversely, those who bought at a higher price are "out of the money," and those at the same price are "at the money."
Recent Trends in Ethereum Profitability
Recently, the percentage of Ethereum addresses in profit has plummeted from over 90% earlier this year to just 61%. This decline has coincided with a bearish trend in the cryptocurrency markets.
During bullish trends, a high percentage of profit-holding addresses can lead to a mass sell-off, as investors are more likely to sell when in profit. Therefore, markets often peak when profitability is high. Conversely, market bottoms tend to occur when the majority of holders are at a loss, as profit-driven sellers become exhausted.
Comparative Analysis with Past Bear Markets
Examining past bear markets, the current downturn's 61% profitability level suggests that Ethereum may not have reached the bottom yet. The 2022 bear market saw profitability fall to 46%, while the 2018 bear market went as low as 3%. Interestingly, during the 2019/20 recovery, profitability briefly dropped below 10%, mirroring previous bear market lows.
Thus, if the current market follows the pattern of a mid-cycle correction, Ethereum's profitability ratio might dip further to near the 46% seen in the last bear market.
ETH Price Update
Starting the new week, Ethereum's price fell to $2,300 after briefly staying over $2,400 during the weekend, indicating a retracement from its recent recovery.
This analysis provides insights into the potential future trends of Ethereum, helping investors to align their strategies accordingly.
