Ethereum Holders In Profit Still At Relatively Low Level
Ethereum, the second-largest cryptocurrency by market capitalization, has recently experienced a 21% price jump, yet only 66% of its holders are currently in profit. This information, derived from IntoTheBlock—a market intelligence platform—suggests that the recent downturn significantly impacted the profitability of Ethereum's investors.
During the recent market slump, Ethereum's price plummeted from a July high of $3,400 to around $2,100. However, the crypto asset has since rebounded above $2,700. While such a recovery would typically enable some investors to regain their losses, the current profitability figures tell a different story.
Investor Cost Basis and Market Resistance
IntoTheBlock's analysis highlights price ranges where Ethereum investors made their purchases. Many bought ETH when prices were between $2,920 to $3,000 and $3,000 to $3,080. Since Ethereum's current trading price is below these levels, these investors are not in profit and are waiting for the price to return to their cost basis. This expectation can create market resistance, as these investors may sell their holdings once Ethereum's price approaches these previous highs.
When many investors have the same cost basis within a narrow range, the likelihood of a substantial sell-off increases, potentially hindering Ethereum's recovery. However, the risk of a massive sell-off remains low, as many investors perhaps exited during the recent downturn.
Influence of Profit-taking and Market Signals
Profit-taking refers to investors selling assets to lock in gains. Given that only 66% of Ethereum holders are currently in profit, the potential for a widespread sell-off driven by profit-taking is minimal. Moreover, analyst Ali Martinez noted a Tom Demark (TD) Sequential sell signal on Ethereum's hourly chart. This signal indicates a potential price decline, though it may not be significant due to the short timeframe.
ETH Price Outlook
As of now, Ethereum's trading price hovers around $2,700, reflecting a modest increase of over 2% in the past 24 hours. While the asset recently faced a plunge, its future movements will depend on market dynamics, including investor sentiment and external economic factors.
Understanding these trends is crucial for anyone interested in the cryptocurrency market, whether an experienced trader or a newcomer. By staying informed about market signals and investor behavior, individuals can make more educated decisions in this volatile market.
