Key Points
Ethereum’s Ether (ETH) has been lagging behind Bitcoin (BTC) in this cycle, putting new holders at risk of potential losses.
In its latest newsletter, “The Week On-Chain” released on May 7, Glassnode, an analytics firm, shed light on the role of speculators in supporting the ETH price.
Ethereum Speculators Nearing “Panic”
Both Bitcoin and Ether have experienced a decrease in price following Bitcoin’s most recent block subsidy halving in April.
The past few weeks have been tough for Ethereum enthusiasts, especially after BTC/USD experienced one of its largest drawdowns since the FTX incident in late 2022.
According to Glassnode, Ethereum’s deepest drawdown of the cycle has been -44%, just over twice as severe as Bitcoin’s -21%.
This emphasizes Ethereum’s relative underperformance over the last two years, which is also reflected in a weaker ETH/BTC ratio.
While the extent of ETH price drawdowns is diminishing, certain investor groups are now at risk of falling into the red on their holdings.
Ethereum’s short-term holders (STHs) — entities holding coins for 155 days or less — have their aggregate cost basis right at $3,000.
ETH/USD continues to hover around that level, with a brief dip below it last week quickly bought up.
Looking at Ethereum’s market value to realized value (MVRV) metric, Glassnode suggested that a new market drop could cause panic among these entities.
MVRV measures unrealized profit and loss, in this case for STHs, at a given price.
According to Glassnode, Ethereum’s STH-MVRV is trading at a very slight premium at the moment, indicating that spot prices are very close to the cost basis of recent buyers, who may panic should the market experience downside volatility.
In summary, Glassnode noted that the market is waiting for signals from United States regulators about the future of spot Ether exchange-traded funds (ETFs).
Long-term holders, or LTHs, on the other hand, seem reluctant to sell en masse at current prices despite many already achieving healthy profit margins.
According to the newsletter, Ethereum’s Long-Term Holders appear to still be waiting for better profit-taking opportunities.
