10 May

According to Glassnode's recent newsletter "The Week On-Chain" dated May 7, Ethereum's Ether (ETH) has demonstrated comparatively weaker performance in this market cycle when compared to Bitcoin (BTC), which is currently priced at $62,988. This discrepancy in performance may pose a risk for new ETH holders who could potentially face losses.

Glassnode's analysis highlighted the role of speculators in providing support for the price of ETH.

Speculators of Ethereum on the verge of "panic" 

Following Bitcoin's latest block subsidy halving in April, both Bitcoin and Ether have experienced downward price movements. Ethereum bulls have faced significant challenges in recent weeks, particularly after BTC/USD witnessed one of its largest drawdowns since the FTX debacle in late 2022.

Glassnode noted similarities in the drawdown structures of Bitcoin and Ethereum, with Ethereum showing shallower corrections since the FTX lows. This suggests a degree of resilience during pullbacks and a reduction in volatility across the digital asset space.

However, Ethereum's deepest drawdown of the cycle has been -44%, which is more than twice as severe as Bitcoin's at -21%. This highlights Ethereum's relative underperformance over the past two years, reflected in a weaker ETH/BTC ratio.

While the extent of ETH price drawdowns is decreasing, certain investor groups now risk falling into negative territory on their holdings. Short-term holders (STHs) of Ethereum, defined as entities holding coins for 155 days or less, have an aggregate cost basis around $3,000.

Analyzing Ethereum's market value to realized value (MVRV) metric, Glassnode suggested that a further market decline could trigger panic among these entities. STH-MVRV, which measures unrealized profit and loss for short-term holders at a given price, is currently trading at a slight premium. This suggests that spot prices are very close to the cost basis of recent buyers, who may panic in the face of downward volatility.

Absence of desire to profit

Glassnode observed that the market is eagerly awaiting signals from US regulators regarding the status of spot Ether exchange-traded funds (ETFs).

Despite the current price levels, long-term holders (LTHs) of Ether seem hesitant to sell in large quantities, with many already enjoying substantial profit margins.

When analyzing the Spent Volume in Profit for LTHs, Glassnode noted that the cohort of Bitcoin holders who have held for between 6 months and 2 years increased their divestment during the all-time high (ATH) rally.

Similarly, Ethereum's Long-Term Holders are seen as waiting for better profit-taking opportunities, suggesting a reluctance to sell at current prices.

May 2024, Cryptoniteuae

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