More than 50% of Ethereum holders in the red

Ethereum’s market has taken a hit, with only 47% of addresses profitable at the current price of $1,900, while Bitcoin’s holders enjoy a much stronger profit rate of 86%. 

Amid broader market volatility and recession fears, ETH has fallen by 52.8% over the past year and dropped 13.5% in the last week, highlighting significant challenges for the second-largest cryptocurrency.

Key Takeaways

- Majority in Loss: Only 47% of Ethereum addresses are profitable, compared to 86% for Bitcoin, signaling widespread investor pain.

- Price Decline and Volatility: ETH’s price has declined by 52.8% over the past year and fell 13.5% last week, amid an overall market decline of 11%.

- ETF Outflows: Ethereum exchange-traded funds have experienced net withdrawals, with $21.5 million exiting on March 11, reflecting cautious investor sentiment.

- Positive Supply Indicators: Declining Ethereum reserves on exchanges suggest reduced selling pressure, potentially setting the stage for a short squeeze.

Market Challenges and On-Chain Data

Recent on-chain data from CryptoRank reveals that only 47% of Ethereum addresses are profitable at the current price level of $1,900, meaning around 53% of holders are operating at a loss. This contrasts sharply with Bitcoin, where 86% of addresses show profit. 

Ethereum price chart. Source: coinmarketcap.com

The situation is exacerbated by a steep price decline—ETH has fallen 52.8% over the past year and experienced a 13.5% drop in the last week, compared to an 11% dip in the overall cryptocurrency market. Additionally, withdrawals from Ethereum ETFs have been steady, with a net outflow of $21.5 million on March 11, highlighting the market’s cautious stance and underscoring the fragility of investor sentiment in these turbulent times.

Optimism Amid Downturn

Despite the stark figures and ongoing market pressures, Ethereum co-founder Joseph Lubin has maintained a cautiously optimistic outlook. Lubin recently stated, “Perhaps never been more bullish after the recent shakeout and much needed resets,” suggesting that current market conditions could pave the way for a recovery once the dust settles. He points to declining exchange reserves—the lowest seen in years—as a strong, bullish indicator that holders are starting to lock up their assets rather than selling them off. 

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This reduction in liquidity on exchanges could lead to a short squeeze, forcing a rapid price correction as buying pressure intensifies. Lubin’s optimism is also buoyed by positive political developments and the renewed focus by U.S. regulators on digital assets, which may ultimately foster a more favorable environment for decentralized protocols like Ethereum. The potential regulatory clarity and economic measures could help stabilize the market, providing a foundation for sustained recovery in the near future.

Looking Ahead: Key Support and Market Catalysts

The road to recovery for Ethereum will depend heavily on its ability to hold critical support levels and overcome the current bearish momentum. Technical analysts are closely watching the $2,200 support zone; a sustained hold above this level could signal the beginning of a rebound. In contrast, a breach of this support could trigger further sell-offs, pushing ETH toward sub-$2,000 levels. 

Additionally, investors are monitoring broader macroeconomic indicators and market catalysts, such as potential central bank interventions, that might provide the liquidity needed to ignite a recovery. As the market awaits clearer signals from both the U.S. regulatory landscape and global economic policies, the coming weeks will be crucial. With reduced selling pressure evidenced by lower exchange reserves, there is cautious optimism that once buying begins in earnest, Ethereum could stabilize and eventually start climbing, albeit with continued volatility in the interim.

Conclusion and Future Prospects

While Ethereum faces significant challenges in the current market environment, emerging signs of reduced liquidity and renewed regulatory focus provide a glimmer of hope for recovery. The interplay of technical support levels, investor sentiment, and macroeconomic factors will determine whether ETH can reverse its recent downtrend. 

For now, the market remains divided, with bearish pressures prevailing, but a potential short squeeze and improved fundamentals could set the stage for a rebound. Traders and long-term investors alike are keeping a close watch on these developments, as Ethereum’s next moves could well define its trajectory for the remainder of the crypto bull cycle.

Recently we wrote, that Cboe BZX Exchange has officially filed a proposal to amend the structure of the Franklin Ethereum-ETF, seeking approval from the U.S. Securities and Exchange Commission (SEC) to incorporate staking services.