Ethereum Drops 53% Below Realized Price, 53% of Investors Underwater

Ethereum has experienced a significant downturn, dropping below its realized price of $2,058.04 for the first time in two years. This decline has left the majority of investors underwater, with only 47% of ETH holders remaining in profit. The cryptocurrency has been on a downward trajectory, falling from its December peak and reaching its lowest level since November 2023. This drop has been attributed to a three-month downtrend, with Ethereum retracing around 53% of its value since its peak.

The decline has been particularly pronounced in recent weeks, with Ethereum falling below the key $2,000 support level. This has led to concerns about a potential further correction, with some analysts predicting another 15% drop if the trend continues. The cryptocurrency has been trading between $1,750 and $2,000, with some market watchers suggesting that it could retest the $1,600-$1,800 level.

As ETH declined, it dropped below its realized price for the first time in two years. This decline suggests that average investors are now holding ETH on unrealized loss. Ethereum’s drop to this level risks capitulation, as long-term holders start to panic sell fearing further decline. Equally, the drop suggests that ETH is experiencing extreme bearish sentiment, with investors continuing to sell, leading to strong downward pressure.

Looking at exchange flows, it seems this dip arises from significant selling activity. As such, over the past two days, ETH has recorded positive exchange inflows with over 100k ETH tokens sent to exchanges. This suggests that investors have been actively selling the altcoin to cut their losses. As such, the markets have recorded two consecutive days of positive exchange netflow. When this turns positive, it suggests that there are more inflows to exchanges than withdrawals reflecting strong bearish sentiments.

This sentiment is also highly prevalent among whales. In fact, Ethereum’s Large Holders Netflow to Exchange Netflow Ratio has surged over the past day to hit 79%. Such a huge spike suggests that whales are actively sending their holdings to exchanges in preparation to sell. When whale exchange inflow rises, it implies a lack of market confidence where long-term large holders are fearing more losses.

Finally, Ethereum’s fund market premium has remained negative for a sustained period. Investors have remained bearish, and there’s a low institutional or whale demand for ETH. Thus, markets are seeing a risk-off sentiment. The current market conditions position ETH for more losses on its price charts unless positive events bring speculative demand for a rebound. However, when prices drop below realized price, it offers a perfect buying opportunity and has historically offered significant returns.

Thus, with strong bearish sentiments holding in the market, ETH must reclaim $2,058 which is the realized price for a potential upside reversal. Failure to reclaim this level, the next support for the altcoin is $1,440. The current performance of Ethereum highlights the volatility and uncertainty of the cryptocurrency market, with investors closely monitoring the situation for any signs of a potential rebound.