On-chain data shows that 90% of all Ethereum investors are currently making profits after the asset’s price surged above $3,800.
Ethereum investors overwhelmed by green after ETF rally
According to data from the market intelligence platform To the Blockthe recent enhance in ETH meant that there was a change in investor profitability on the network.
To track holder profitability, the analytics company uses on-chain data to find out what the average purchase price, or cost basis, of each address on the blockchain is.
If this price is lower than the current spot value of the cryptocurrency for any given address, then that particular investor is considered to be making a profit, or “in the money” as defined by IntoTheBlock.
On the other hand, a cost basis that is lower than the price of the asset suggests that the address carries with it some amount of net loss and that the holder would therefore be “out of money”.
Naturally, if the average purchase price of the portfolio is equal to the spot price of the coin, then the investor will be considered to be breaking even (“at the money”).
Here’s what the profitability breakdown of the Ethereum user base looks like after the explosive growth this resource has enjoyed:
Looks like a vast amount of investors are in the green at the moment | Source: IntoTheBlock on X
As you can see above, 90% of all addresses on the Ethereum network hold their coins with unrealized net gains after the asset’s price skyrockets.
Interestingly, 0% of wallets also have no money, which means there is no one left on the blockchain to suffer losses. However, 10% of investors are still at breakeven.
Historically, holders of profits have been more likely to sell than those who have suffered a loss. Therefore, whenever there is a vast imbalance in the market towards green investors, the chances of a sell-off are noticeable.
For this reason, cryptocurrency price peaks may become more likely at high levels of the profitability ratio. With an overwhelming number of ETH investors currently taking profits, it is likely that massive profit taking will occur, which could hamper the current rally.
However, it is significant to note that during a bull market, these assets are typically able to sustain high investor profits for a period of time as high demand flows in, absorbing profit-taking before it finally peaks.
That said, the likelihood of at least transient outages may enhance if profitability remains high for too long. Time will tell how Ethereum’s price develops from here and whether the hype around spot ETFs will be able to counteract any market sell-offs.
ETH price
With an enhance of over 22% in the last 24 hours, Ethereum managed to reach its highest level in over two months, and its price is currently around $3,800.
The price of the coin seems to have observed some keen bullish momentum in the past day | Source: ETHUSD on TradingView
Featured image by Bastian Riccardi on Unsplash.com, IntoTheBlock.com, chart from TradingView.com
