How It Compares With Past Bear Markets

Data shows just 61% of Ethereum holders have been left in profit after the recent bearish action. Here’s how it compares with past bear markets.

Ethereum Holders In Profit Have Registered A Notable Drop Recently

In a new post on X, the market intelligence platform IntoTheBlock has discussed how the Ethereum investor profitability has been looking recently. The indicator of relevance here is the “Historical In/Out of the 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 it acquired its coins. If this cost basis for any wallet was less than the current spot price of the asset, then that particular investor may be considered to be in a state of profit right now.

IntoTheBlock labels such addresses to be “in the money.” Similarly, the holders of the opposite type, that is, those who are underwater, are put under “out of the money.”

Addresses that have their acquisition level exactly equal to the current spot price of the cryptocurrency are assumed to be just breaking-even and are termed to be “at the money.”

Now, here is a chart that shows the trend in the Ethereum Historical In/Out of the Money over the past several years:

Looks like the holders in profit have been declining in recent days | Source: IntoTheBlock on X

As displayed in the above graph, the total percentage of the Ethereum addresses in the money had risen beyond the 90% mark during the price rally earlier in the year. With the bearish price action in recent months, however, the metric has been observed to be on the way down.

Following the latest continuation of the downtrend, the indicator has now come down to around 61%, which is significantly lower than the level from earlier in the year.

Generally, the investors who are in profit are more likely to participate in selling at any given time, so a large amount of addresses being in the green can raise the chances of a mass selloff taking place. Because of this reason, tops have historically occurred when the metric has been at high levels.

Bottoms, on the other hand, have tended to form when loss holders have seen their dominance reach notable levels, as profit-sellers become exhausted at such a stage.

As for whether the drop to the 61% level that the indicator has seen would be enough for Ethereum to hit a bottom this time as well, perhaps past data could provide some hints.

According to the analytics firm, the 2022 bear market saw the metric bottom out at around 46%, while the 2018 bear market witnessed it go as low as about 3%. Interestingly, the 2019/20 recovery period that followed the latter bear saw the indicator briefly revisit levels under 10%, similar to the bear’s lows themselves.

Thus, it’s possible that if the current market downturn is similar to the last mid-cycle correction, Ethereum’s profitability ratio might end up touching levels close to the 46% mark of the last bear market.

ETH Price

Ethereum has opened the new week with a drop back to $2,300 after staying above $2,400 during the weekend.

The price of the coin appears to have retraced its recent recovery | Source: ETHUSDT on TradingView

Featured image from Dall-E, IntoTheBlock.com, chart from TradingView.com