Ethereum (ETH) is the largest and most used decentralized finance (DeFi) and Web3 layer-1 blockchain infrastructure. Its native token, ETH, is also the second-largest cryptocurrency by market cap, with $270 billion at the time of publication.
Notably, Ethereum’s price is up 85% in the last year, now trading at $2,249 per token. This surge has rewarded ETH holders, who are now 76% in profit, according to data by IntoTheBlock on December 16.
In particular, the percentage of Ethereum investors in profit is the same as long-term holders, who have kept their positions for over a year. Both data sets are achieved by looking at all active addresses in the network from the received and spent transactions.
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However, 23% of all Ethereum wallets are holding a losing ETH position, while 1% acquired the token at current prices. At the same time, 21% of Ethereum holders have held their position for between one and 12 months, while 3% just recently bought ETH.
Is it time to buy ETH with 76% of Ethereum holders in profit?
It is important to understand that the higher the number of Ethereum holders in profit, the higher the likelihood of a sell-off, as they might want to realize the, so far, unrealized profit. Therefore, buying ETH right now could mean becoming the profitable exit liquidity for 76% of all Ethereum holders.
Meanwhile, only 46% of the tokens are concentrated in the hands of addresses holding at least 0.1% of its supply. The low concentration of whales and institutional investors lowers the risk of huge coordinated sell-offs. Balancing the previous analysis.
Cryptocurrency traders controversially believe we are experiencing either a bull rally in a bear market or a bull market already. Understanding the current status of cryptocurrencies is essential to make a profitable decision of buying or not buying ETH.
Moreover, further developments and DeFi ecosystem growth for Ethereum could generate more demand for its token. An increased demand would drive ETH prices up, while a reduced demand would create an opposite outcome.
All things considered, the decision to buy ETH is personal, and investors must be aware of the risks. Essentially, having a good risk management start is necessary while investing in such a volatile and experimental market.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.