Ethereum showed weaker performance compared to Bitcoin, and new owners now face the risk of losses. Blockchain data analysis platform Glassnode revealed in its latest newsletter on May 7th the role of speculators in supporting Ethereum’s price.
What to Expect for Ethereum?
This period has been tough for Ethereum bulls, witnessing one of the biggest drops in BTC/USD pair since the FTX debacle late 2022. Glassnode shared the following in its latest report:
“Since the low levels seen during the FTX process, Ethereum might see similar downturn structures with particularly shallower corrections. This leads to some resilience during pullbacks and a clear decrease in volatility in the crypto asset space.”
While the magnitude of Ethereum’s price drops decreases, some investor groups now face the risk of their assets turning red. The average cost basis of Ethereum’s short-term holders (STHs) is at the $3,000 level.
Analyzing the data between Ethereum’s market value and realized value (MVRV), the Glassnode team suggested that a new market downturn could cause panic among these assets. MVRV measures unrealized profit and loss at a certain price for STHs. The Glassnode team shared the following:
“Ethereum’s STH-MVRV is currently trading at a slight premium; this could indicate that spot prices are very close to the cost basis of the last buyers, who might panic if there is downward volatility in the market.”
Notable Warning from Glassnode Team
In summary, Glassnode acknowledges that the market is awaiting signals about the fate of spot Ethereum exchange-traded funds from US regulators. Meanwhile, long-term holders (LTHs), most of whom have already reached healthy profit margins, seem reluctant to sell en masse at current prices. The newsletter explained this issue with the following statements:
“If we examine the Spent Profit Volume for LTHs, we can see that the group of Bitcoin holders who have held for between 6 months and 2 years increased their disposals during the ATH rally. From this perspective, it seems that Ethereum’s Long-Term Holders are once again waiting for better profit opportunities.”
