Ethereum Profitability Drops to 61% Amid Bear Market

John Darbie
Photo: Finoracle.net

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.

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John Darbie is a seasoned cryptocurrency analyst and writer with over 10 years of experience in the blockchain and digital assets industry. A graduate of MIT with a degree in Computer Science and Engineering, John specializes in blockchain technology, cryptocurrency markets, and decentralized finance (DeFi). His insights have been featured in leading publications such as CoinDesk, CryptoSlate, and Bitcoin Magazine. John’s articles are renowned for their thorough research, clear explanations, and practical insights, making them a reliable source of information for readers interested in cryptocurrency. He actively follows industry trends and developments, regularly participating in blockchain conferences and webinars. With a strong reputation for expertise, authoritativeness, and trustworthiness, John Darbie continues to provide high-quality content that helps individuals and businesses navigate the evolving world of digital assets.