Trend Research: Ethereum Hodl Profit Shrinks to Around $61.7 Million

Ethereum hodl profit has dropped to approximately $61.7 million, reflecting reduced leverage and shifting market dynamics. This decline coincides with a broader slump in altcoins, including a sharp drop in SENT, which fell over 33% in 24 hours. The move highlights the ongoing bearish grip on the crypto market, especially as retail demand wanes.

Technical indicators suggest Ethereum remains below its 100-day exponential moving average (EMA), capping upside potential. The RSI stabilized at 62, indicating a lack of upward momentum. A break below the 100-day EMA could trigger further losses toward the 50-day EMA at $3,154.

Open interest for Ethereum has also declined, signaling reduced leverage exposure. Open interest for ETH futures dropped to $41.27 billion from $41.41 billion in the previous day. This decline aligns with a drop in the Ethereum estimated leverage ratio (ELR), which fell from 0.79 at the start of January to 0.66 by midweek, suggesting a more spot-driven market.

Why Did This Happen?

The decline in hodl profit is attributed to reduced leverage and weak retail demand. Retail investors have been exiting positions, as reflected in the steady decline in Bitcoin's open interest from $66 billion to $63 billion over three days. This trend indicates waning confidence in short-term bullish prospects.

Ethereum's price action has been influenced by institutional buying through spot ETFs. US-based ETFs have seen a second consecutive day of inflows, totaling $305 million since early January. Despite this, retail participation has not followed suit, weakening the overall tailwind for prices.

How Did Markets React?

Ethereum's decline was mirrored across other altcoins, with XRP also seeing a drop in open interest to $3.94 billion from $3.98 billion in the previous 24 hours. Bitcoin, though holding above critical support at $95,000, has shown signs of pressure, trading below its 100-day EMA at $96,009. A break below this level could trigger extended selling pressure.

The broader market has also seen a sharp decline in Bitcoin whale positions. Pseudonymous trader 'BitcoinOG' recently saw over $50 million in unrealized gains from long positions in Bitcoin, Ethereum, and Solana. However, such concentrated gains highlight the high-risk nature of leverage-driven strategies during periods of volatility.

What Are Analysts Watching Next?

Market participants are closely monitoring Ethereum's ability to hold above the 100-day EMA at $3,290. A breakdown below this level could accelerate losses toward the 50-day EMA at $3,154 and the descending trendline from its record high of $4,956.

The MACD indicator for Ethereum remains above its signal line, which could reinforce a short-term bullish bias if the histogram expands above zero. However, a sustained move below the signal line would suggest weakening momentum and increased bearish sentiment.

Investors are also watching the Coinbase Premium Index, which has flipped positive for the first time in several weeks, signaling renewed buying pressure from US markets. This shift may indicate a broader return of institutional and retail buyers, though sustained inflows are needed to confirm a reversal.

The decline in Ethereum's leverage ratio and open interest suggests the market is becoming more balanced between spot and futures activity. This shift could stabilize volatility in the short term but does not guarantee a reversal of the longer-term bearish trend.

Overall, Ethereum's near-term outlook remains uncertain, with technical indicators suggesting a possible test of support levels below the $3,300 mark. Investors will likely be watching for signs of a breakout above the 200-day EMA at $3,470 to confirm a bullish reversal.