Ethereum’s explosion to $3,800 has 90% of investors making a profit

On-chain data shows that 90% of all Ethereum investors are now making profits following the sharp rise in the asset’s price above $3,800.

Ethereum Investors Overwhelm in Green After ETF Rally

This is evident from data from the market information platform InTheBlokETH’s latest rally has caused a shift investor profitability took place on the network.

To track the profitability of holders, the analytics company uses on-chain data to find out the average purchase price or cost basis of each address on the blockchain.

If this price is lower than the current spot value of the cryptocurrency for any address, then that specific investor is considered to be making a profit, or “in the money,” as IntoTheBlock defines it.

On the other hand, the fact that the cost basis is less than the price of the asset indicates that the address is at a net loss, so that its holder is ‘out of money’.

If the average purchase price of the wallet is equal to the spot price of the coin, the investor is of course considered to have just broken even (“at the money”).

Here’s what the profitability of the Ethereum user base looks like after the sharp rally the asset has seen:

Ethereum profitability

Looks like a large amount of investors are in the green at the moment | Source: IntoTheBlock on X

As visible above, 90% of the total number of addresses on the Ethereum network are holding their coins at a net unrealized gain after the sharp increase in the asset’s price.

Interestingly, 0% of wallets also run out of funds, meaning there is no one left on the blockchain to incur losses. However, 10% of investors are still at break-even.

Historically, gain holders are more likely to sell than loss holders. So if there is a major market imbalance towards green investors, the likelihood of a to sell events have been remarkable.

For this reason, spikes in the cryptocurrency’s price may become more likely at high profitability levels. Since an overwhelming amount of ETH investors are now booking profits, it is likely that there will be massive profit taking, which could hinder the current rally.

However, it should be noted that during bull markets, the asset has generally been able to maintain high investor profits for a while, as high demand continues to flow in to absorb any profit-taking, before eventually forming a top.

That said, the likelihood of a temporary slowdown may increase if profitability remains high for too long. It now remains to be seen how the Ethereum price will develop from here and whether the hype surrounding it will build Spotting ETFs will be able to counter any possible sell-off on the market.

ETH price

Rallying over 22% in the past 24 hours, Ethereum has managed to reach its highest levels in over two months as its price now trades around $3,800.

Ethereum price chart

The price of the coin seems to have observed some sharp bullish momentum in the past day | Source: ETHUSD on TradingView

Featured image by Bastian Riccardi on Unsplash.com, IntoTheBlock.com, chart from TradingView.com

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