IMPORTANT POINTS:
- The price of Ethereum has risen 85% in the last year, with 76% of holders profiting.
- There is a risk of a massive sell-off due to the high proportion of holders in profit.
- ETH investment decisions should be based on a careful understanding of the market and good risk management.
Ethereum (ETH) is the largest and most widely used blockchain infrastructure for decentralized finance (DeFi) and layer-1 Web3. Its native token, ETH, is also the second-largest cryptocurrency by market capitalization, at $270 billion at the time of publication.
Notably, the price of Ethereum has increased by 85% in the last year, now trading at $2,249 per token. This increase has rewarded ETH holders, who are now 76% in profit, according to data from IntoTheBlock as of December 16.
In particular, the percentage of Ethereum investors in profit is the same as that of long-term holders, who have held their positions for more than a year. Both sets of data are obtained by looking at all active addresses on the network from transactions received and spent.
However, 23% of all Ethereum wallets are holding a losing position in ETH, while 1% purchased 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% recently purchased ETH.
Is it time to buy ETH?
It is important to understand that the greater the number of Ethereum holders in profit, the greater the probability of a sell-off, since they might want to realize the hitherto unrealized gain. Therefore, buying ETH right now could mean becoming the profitable exit liquidity for 76% of all Ethereum holders.
Meanwhile, only 46% of tokens are concentrated in the hands of addresses that hold at least 0.1% of their supply. The low concentration of whales and institutional investors reduces the risk of large coordinated sales. Balancing the previous analysis.
Cryptocurrency traders cryptocurrency controversially believe that we are experiencing either a bull run in a bear market or a bull market already. Understanding the current state of cryptocurrencies is essential to making a profitable decision to buy or not buy ETH.
In addition, future developments and the growth of the DeFi ecosystem for Ethereum could generate more demand for its tokens. Increasing demand would drive ETH prices upward, while reduced demand would create the opposite result.
In summary, the decision to purchase ETH is a personal one, and investors should be aware of the risks. Essentially, getting a head start on risk management is necessary when investing in such a volatile and experimental market.
