Ethereum's Price Drops Below Long-Term Holders' Cost Basis, 40% Supply in Loss

Ethereum, a major cryptocurrency, has been experiencing a prolonged period of underperformance compared to other significant crypto assets. This stagnation has left a substantial number of ETH investors in a state of loss, as indicated by on-chain data. The current market dynamics for Ethereum are at a critical juncture, with its realized price hovering around a pivotal level that could determine the asset's future trajectory.

FundingVest, an on-chain data analyst, highlighted that Ethereum’s accumulation addresses are currently at a crucial point. The realized price for these addresses has dipped below the cost basis, a development that could either lead to further selling pressure or a potential rebound. This make-or-break moment is critical as it will influence whether Ethereum can regain its upward momentum or face further declines.

Currently, Ethereum is trading below the realized price of long-term holders, a level that typically serves as strong support during bullish cycles. If the price remains below this level, it could signal significant future losses. Conversely, a quick recovery above this threshold might indicate a bullish reversal. The current situation suggests mounting pressure on wallets that accumulated significant wealth during the 2020-2021 market cycles. Historically, dips below the long-term holders’ realized price have been brief and uncommon, but persistent weakness in this zone could indicate a more substantial market shift.

ETH’s current market price falling below the average cost basis of these accumulators raises questions about its sustainability and future prospects. The persistent bearish pressure on Ethereum has limited its potential for a major price rally, leading to a historic low in the percentage of Ethereum supply in profit. This drop to 40% is lower than the last bear market cycle bottom, around 42% when the altcoin was trading at the $800 mark. This sharp decline is seen as a clear signal to deploy, with the potential for generational buy opportunities if the supply in profit drops to about 30%.

Additionally, the ETH Realized Price Multiple has declined to its last cycle bottom level, considered another on-chain buy signal for the altcoin. The current market conditions for Ethereum are fraught with uncertainty, but analysts remain optimistic about potential buy opportunities if the supply in profit continues to drop. The next few weeks will be crucial in determining whether Ethereum can overcome its current challenges and regain its upward momentum.