Ethereum’s Ether (ETH) has “underperformed” Bitcoin (BTC) this cycle and new holders now risk losing money.
In the latest edition of its newsletter “The Week On-Chain” dated May 7, analytics firm Glassnode revealed the role of speculators in supporting the price of ETH.
Ethereum Speculators On Edge Of “Panic”
Both Bitcoin and Ethereum have seen their prices decline since Bitcoin’s most recent block subsidy was halved in April.
However, the Ethereum bulls have taken a huge hit over the past few weeks after BTC/USD witnessed one of the biggest declines since the FTX debacle in late 2022.
“For Ethereum, we see a similar downward structure with a noticeably shallower correction following the FTX low. This not only provides some resilience during downturns, but also impacts a net reduction in volatility across the digital asset space,” Glassnode wrote.
“However, it is worth noting that Ethereum’s deepest cycle decline was -44%, which is more than twice as severe as Bitcoin’s -21%. This highlights Ethereum’s relative underperformance over the past two years, which is also reflected in the weaker ETH/BTC ratio.”
While ETH price declines are decreasing, certain groups of investors are facing a situation where their holdings are going into the red.
The total cost basis for Ethereum short holders (STH) who hold coins for 155 days or less is $3,000.
Data from Cointelegraph Markets Pro and TradingView shows that ETH/USD continues to trade at this level, with a brief decline last week prompting rapid buying.
Analyzing Ethereum’s Market Value to Realized Value (MVRV) metric, Glassnode suggested that a fresh market decline could trigger panic among these companies. MVRV measures the unrealized profit or loss of STH at a given price.
“Ethereum’s STH-MVRV is currently trading at a very slight premium, which could mean the spot price is very close to cost basis for recent buyers, and buyers could panic if the market experiences downside volatility. .” he warned.
No desire to pursue profit
In summary, Glassnode acknowledged that the market is waiting for a signal from US regulators regarding the fate of the spot Ether exchange-traded fund (ETF).
Related: Bitcoin Could Soon Rise ‘Higher’ on Bullish Candle Hammer — Glassnode execs
Meanwhile, long-term holders (LTHs) appear reluctant to sell in large quantities at current prices, even though many have already achieved healthy profit margins.
“If we examine LTH’s profit spending, we see that a group of BTC holders who had been holding for between six months and two years increased their selling during the ATH rally,” the newsletter continued.
“From this perspective, it appears that long-term Ethereum holders are once again waiting for better profit opportunities.”
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.