Ethereum (ETH) Supply in Profit Hits Lowest Level Since November 2023 

This week, the 7-day moving average of the percentage of Ethereum (ETH) supply in profit dropped to 85.66%, marking its lowest point since Nov. 2023. This metric measures how many units investors are willing to have above their previous buying or selling price in the circulating supply. 

This percentage was at 94% just three weeks ago; however, it has reduced, and this must have been due to the circulation that ETH is selling at a much lower price following a general selloff across the market.

Cost Basis Impacted by Recent Price Movements 

Although the proportion of ETH supply in profit has decreased by 3% since the start of the year, the current price of ETH is approximately 15% higher compared to earlier this year. This implies that a substantial portion of Ethereum acquired in 2024 may have been bought in the second quarter and later when prices were below $4000 and had not significantly advanced further.

This trend suggests that large numbers of more recent buyers are selling at the current price levels this year, thereby driving down their cost basis. However, this decline does not mean that the majority of ETH holders have made losses up to the current time; as of early 2024, the price of ETH has risen by 15% compared to earlier this year, indicating that investors who bought ETH at the beginning of 2024 are likely still in profit. Those who made purchases in 2023 at lower price points should also be faring well.

However, this decline in the profit supply percentage suggests that investors who acquired ETH at the recent 2024 highs might be facing challenges. According to the latest available data, ETH is trading at $2,576 which is down by 0.45% in the past 24 hours, based on data from CoinMarketCap.

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Ethereum (ETH) saw a nearly 1% decline on Tuesday, with weak open interest which suggested that prices may remain within a certain range for sometime. This lack of movement coincides with Ethereum exchange-traded funds (ETFs) facing a third consecutive day of negative inflows, recording net outflows of $20.3 million on Aug. 20.

Ethereum ETFs and Profit Supply

On Monday, Ethereum ETFs saw net outflows of $13.5 million, which is three days of negative inflows in a row. Notably, Grayscale’s ETHE endured outflows totaling $20.3 million, while Bitwise ETHW experienced inflows of $1.9 million. Other issuers reported no changes in their flows.

Despite the broader market’s downturn in early August, data from IntoTheBlock indicates that a substantial portion of Ethereum’s supply remains in profit. The Global In/Out of the Money metric tracks the number of coins or addresses experiencing gains or losses based on their average acquisition cost. Currently, over 80% of ETH’s supply is in profit. A high percentage of supply in profit following a price dip typically suggests the potential for a consolidation phase in the asset’s price.

Profitability Metrics for ETH

The Market Value to Realized Value (MVRV) Ratio, which measures the average profitability of addresses that have purchased ETH over varying time frames, reveals that while values above zero indicate profitability, values below suggest losses. At present, ETH’s MVRV Ratios for various time frames are as follows: -8.96% for 30 days, -5.41% for 365 days, 12.73% for 2 years, and 6.67% for 3 years. These data indicate long-term holders enjoy positive returns on average, even in the current decline, while short-term holders are facing losses.