Data shows that only 61% of Ethereum holders have made profits following the recent bearish action. Here’s how it compares to previous bear markets.
Ethereum holders in profit have recently recorded a notable drop
In a new after On X, market intelligence platform IntoTheBlock discussed what the profitability of Ethereum investors looks like lately. The indicator of relevance here is the “Historical In/Out of Money”, which breaks down the percentage of ETH holders who are in a state of profit, loss, and break-even.
This metric works by going through the transaction history of each address on the blockchain to find the average price at which it obtained its coins. If this cost basis for a wallet was lower than the current spot price of the asset, then that particular investor can be considered profitable at this time.
IntoTheBlock labels such addresses as “in the money.” Similarly, holders of the opposite type, i.e. those who are underwater, are classified as “out of the money.”
Addresses whose vesting level exactly equals the current spot price of the cryptocurrency are considered to be just breaking even and are referred to as “at the money.”
Here’s a chart showing the historical in/out of Ethereum currency trend over the past few years:
Looks like the holders in profit have been declining in recent days | Source: IntoTheBlock on X
As shown in the chart above, the total percentage of Ethereum addresses in the money had risen above 90% during the price rally earlier this year. However, with the bearish price action of the past few months, the metric has been observed to be on a downward trend.
After the recent continuation of the downward trend, the indicator has now fallen to around 61%, which is significantly lower than the level seen earlier this year.
In general, investors who are in profit are more likely to sell at some point, so a large number of addresses in the green can increase the likelihood of a mass sale occur. For this reason, historically, peaks have occurred when the metric has been at a high level.
Soilson the other hand, usually arose when the dominance of the loss-makers reached a significant level, because the profit-makers became exhausted at such a stage.
Whether the drop to the 61% level that the indicator has seen is enough for Ethereum to bottom out this time around, we may be able to deduce from previous data.
According to the analyst firm, the 2022 bear market bottomed out the metric at around 46%, while the 2018 bear market saw it drop to around 3%. Interestingly, the 2019/20 recovery that followed the last bear market saw the indicator briefly reach levels below 10%, similar to the lows of the bear market itself.
So it’s possible that if the current market downturn is similar to the last mid-cycle correction, Ethereum’s profitability ratio could eventually end up at a level close to the 46% of the last bear market.
ETH Price
Ethereum started the new week with a drop to $2,300 after the price remained above $2,400 over the weekend.
The price of the coin appears to have retraced its recent recovery | Source: ETHUSDT on TradingView
Main image from Dall-E, IntoTheBlock.com, chart from TradingView.com