Only 0.01% of Ethereum holders are in profit; are DeFi liquidations fueling ETH’s downtrend?

Only 0.01% of Ethereum holders are in profit; are DeFi liquidations fueling ETH’s downtrend?

According to IntoTheBlock, 99.99 percent of Ethereum addresses are at a loss or break-even after ETH’s weeks-long decline, a rally that has seen the second-largest cryptocurrency by market capitalization shed more than 23 percent in USD terms since the start of the month.

While the crypto market has in recent weeks seen red across the board, November has been particularly tough for Ethereum holders. At the end of October when ETH sat at $187, more than 27 percent of holders were in profit — in contrast to 76.7 percent of Bitcoin holders.

Now with ETH’s current level of $136, just 0.01 percent of Ethereum addresses (precisely 4,120 addresses) are “in the money” according to the crypto analytics platform IntotheBlock, that is, addresses containing a balance of tokens with an average purchase price lower than the current spot price.

Ethereum in/out money
Source: IntotheBlock

Bitcoin holders better off, significantly

Today, Bitcoin holders are still in a remarkably better situation than Ethereum holders in terms of holding paper gains, even after BTC’s equally spirited downtrend. Almost 55 percent of Bitcoin addresses remain in profit with BTC at $6,731.

As can be visualized by the red bubbles seen above, the vast majority of Ethereum addresses bought in well above $200, meaning ETH will need to stage an extended bull run in order for most holders to recoup paper losses.

The periodic distribution of addresses “out of the money” could pose a significant barrier to such a rally occurring, however. These indicate the location of potential sell walls—price bands that are likely to see notable selling pressure as ETH holders exit their positions to break-even, or take profit.

DeFi lockups could be driving prices down

There is another crucial variable that could diminish Ethereum’s immediate chances of recovery—the usage of ETH as collateral in decentralized finance (DeFi).

Many have anticipated DeFi could significantly bolster Ethereum’s on-chain-activity—one of the keys to catalyzing the recovery in price evidently awaited by more than 99 percent of ETH holders.

While this may be true for Ethereum’s chances in the mid-long-term, DeFi may, in fact, be exacerbating the coin’s current decline as various platforms liquidate ETH to meet debt obligations. The quantity of ETH locked in lending platforms like Compound has dropped sharply in recent weeks, affirming this trend.

ETH locked in Compound
Source: DeFi Pulse

Ethereum | ETH

Updated: Nov 25 at 8:02 pm UTC

Ethereum, currently ranked #2 by market cap, is up 0.82% over the past 24 hours. ETH has a market cap of $16.02B with a 24 hour volume of $11.15B.

Chart by CryptoCompare

Ethereum is up 0.82% over the past 24 hours.

Posted In: , Analysis, DeFi, Price Watch
Invest with AMFEIX

Like what you see? Subscribe to CryptoSlate

Get our daily newsletter containing the top blockchain stories and crypto analysis straight to your inbox.

Sign up to stay informed
Jonnie Emsley

Jonnie Emsley

Fintech Journalist @ CryptoSlate

Jonnie is a writer and blockchain enthusiast based in Ho Chi Minh City, Vietnam. Discovering new corners of the world and emerging tech trends makes him tick.

View author profile

Commitment to Transparency: The author of this article is invested and/or has an interest in one or more assets discussed in this post. CryptoSlate does not endorse any project or asset that may be mentioned or linked to in this article. Please take that into consideration when evaluating the content within this article.

Disclaimer: Our writers' opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.