Over 60% of Ethereum Investors Remain in Profit: Implications for ETH

Ethereum (ETH) has faced a downward trajectory in recent times, slipping below crucial price thresholds. This descent has resulted in a more than 10% drop in its valuation over the last month, with the digital currency now hovering around $2,298, down 2% in just the past week.

Despite this bearish trend, market analysis company IntoTheBlock has shed light on Ethereum and its holders, offering nuanced insights into the current state of the asset.

Analysis from IntoTheBlock indicates that despite the ongoing market downturn, 61% of Ethereum holders have managed to stay profitable. This statistic showcases a level of resilience among Ethereum holders, contrasting with previous market cycles.

Comparing the current scenario to the prior year, during the recent bearish market, the percentage of profitable holders dwindled to a low of 46%. Following the market cycle of 2017, the number of addresses in profit plummeted to a mere 3%. This comparison suggests that the present cycle reflects a stronger belief in the enduring value of Ethereum.

The analytics firm also notes that this resilience signifies a heightened confidence among holders, potentially indicating a more stable foundation for Ethereum even during market contractions. When juxtaposed with the period of 2019-2020, where profit-making addresses fell below 10%, the current landscape hints that any potential downturn might be less severe.

To gain a deeper understanding of Ethereum’s current market position, it is imperative to delve into some key on-chain data. One crucial metric is the estimated leverage ratio. According to CryptoQuant, Ethereum’s estimated leverage ratio has seen a noticeable uptick in recent months, currently standing at 0.355.

The leverage ratio serves as a gauge of the leverage employed in the derivatives market, comparing the Open Interest amount to the total coins held on exchanges. An escalating leverage ratio can indicate increased speculative activity, implying that traders are assuming more risk. This trend can lead to heightened price volatility in both directions, as a surge in leveraged positions raises the likelihood of liquidations, potentially exacerbating price swings.

Additionally, monitoring the number of new Ethereum addresses offers insights into network activity and potential market sentiment. Data from Glassnode reveals a decline in new addresses, dropping from a peak of over 126,000 on September 6 to approximately 79,000 new addresses presently.

A diminishing count of new addresses typically signifies reduced engagement or interest in the network, which can serve as a bearish signal. This decline in network activity, coupled with the rising leverage ratio, can contribute to the sustained downward pressure on Ethereum’s price.