Comparison of Ethereum Address Profitability: Present vs Past Bear Markets

Recent data reveals that only 61% of Ethereum holders are currently in profit following the recent downturn in the market. This statistic sheds light on the impact of the bearish action on Ethereum investors compared to previous bear markets.

A report on X by the market intelligence platform IntoTheBlock delves into the profitability status of Ethereum investors. The key metric under scrutiny is the “Historical In/Out of the Money,” which delineates the percentage of ETH holders in profit, loss, and break-even positions.

This metric functions by analyzing the transaction history of each wallet on the blockchain to determine the average acquisition price of the coins. If the cost basis of a wallet is lower than the current market price of the asset, the investor is considered to be in profit.

IntoTheBlock categorizes addresses with profits as “in the money” and those with losses as “out of the money.” Wallets with an acquisition price equal to the current market price are deemed to be “at the money.”

A chart illustrating the trend in Ethereum Historical In/Out of the Money over several years displays a decline in the percentage of Ethereum addresses in profit from over 90% during a previous price rally to the current 61% amid the recent bearish market activity.

Historically, a high proportion of addresses in profit often precedes a potential mass selloff, while market bottoms tend to form when loss holders dominate and profit-sellers dwindle. The current indicator level of 61% raises questions about whether Ethereum is approaching a market bottom.

Past data indicates that during the 2022 bear market, the profitability metric hit a low of 46%, while the 2018 bear market saw it plummet to around 3%. Following the 2018 bear market, the recovery phase witnessed the indicator briefly dropping below 10%, akin to the bear market lows.

If the current market correction mirrors previous trends, Ethereum’s profitability ratio may approach the 46% mark seen in the last bear market.

In terms of price, Ethereum has retraced to $2,300 at the beginning of the week after hovering above $2,400 over the weekend. This price movement reflects the ongoing volatility in the cryptocurrency market.

In conclusion, the fluctuating profitability of Ethereum holders amid market uncertainties underscores the dynamic nature of the crypto landscape and the importance of monitoring key metrics to gauge market sentiment and potential trends.