Ethereum Market Cap Vulnerable With 38% Within 20% Of Cost Basis

On-chain data reveals that a significant portion of Ethereum's market capitalization was acquired near the current price, indicating a potentially fragile position for ETH. According to the on-chain analytics firm, the largest share of Ethereum's market cap is currently above the spot price by just 0 to 20%. This means that a large portion of the Ethereum market cap is sitting close to its cost basis, making it vulnerable to price fluctuations.

The "Market Cap by Profit and Loss" indicator is crucial in understanding this dynamic. It shows how much of the Ethereum market cap has its cost basis within a certain distance of the cryptocurrency’s price. If the cost basis of the tokens is below the latest price, they are in profit; if above, they are in loss. The data indicates that about $123 billion of the ETH market cap, equivalent to almost 38%, falls within the 0 to 20% cohort. This means that even a minor pullback could send a large number of tokens underwater, potentially leading to mass losses.

Despite recent gains, Ethereum remains in a fragile position. The delicate profit-loss balance of this supply suggests that even an ordinary pullback could result in significant losses. This vulnerability is further highlighted by the fact that whales, defined as investors holding between 10,000 and 100,000 tokens, have been increasing their holdings. Over the past month, whales have added around 1 million ETH (worth around $2.7 billion at the current exchange rate) to their holdings, indicating a buying push from these large investors.

Ethereum's price has shown some volatility, with a recent decline below the $2,500 level. However, the coin has since rebounded and is currently trading around $2,700. This price movement underscores the delicate balance of the Ethereum market, where even small price changes can have significant impacts on the overall market cap and investor sentiment.