Is the recent bullish sentiment in the Ethereum network good or bad? Short-term holders are now in the red, are we approaching a „selling zone“?
Santiment’s latest findings, published in Cointelegraph Consulting’s bi-weekly newsletter, indicate that discussions on the Ethereum have moved from very bearish to predominantly bullish. Historically, this has not been good news for the price of the token.
Ethereum’s chain activity, measured by single daily addresses, has recovered since its late summer plunge. The latest increase took Ethereum to a 3-week high of 420,610 addresses per day, marking a 25.2% increase over the previous day.
Another notable trend is the 365-day inactive circulation of Ethereum, which tracks the renewed movement of all tokens that previously have not changed direction for more than a year. This number has remained relatively low since the October 7th low, with a recorded daily average of only 13,438 ETH, suggesting that long term holders are still holding on to their holdings despite the recent price rebound.
The Ethereum network’s Profit/Loss, which calculates the average gain or loss of all currencies that change direction daily, is a good way to see which holders are selling at a panic loss. In the midst of the market-wide collapse on 13 March 2020, the Ethereum network recorded a cumulative loss of USD 2,932,200 based on the network’s Profit/Loss: a minimum of 3 months. Similarly, the Ethereum network realised a cumulative loss of USD 998,998 on 7 October, shortly before the currency bounced above USD 350.
Several of the Ethereum lows over the past 2 months showed the same pattern of behaviour, suggesting massive panic selling and a short-term redistribution of Ethereum to strong hands, allowing for a more sustained rebound. This metric remains important as statisticians can calculate „blood on the streets“.
Ethereum’s 30 day MVRV (market value/realised value) ratio, which tracks the average gain (or loss) of all directions that acquired ETH in the last 30 days, indicates that short term ETH holders are, on average, currently 8% above their initial investment.
At present, Ethereum’s 30 day MVRV ratio is still some way off what has historically been considered a „danger zone“, marking the levels at which short term holders have sought to dispose of their holdings in the past.