Over 98% of the circulating Ethereum supply is now in a profitable state, reaching a two-year high and signaling a heightened risk of a price correction as investors may look to cash in on their gains.
Not-Seen Profit Level in Two Years
According to on-chain data platform Glassnode, its “Percent Supply in Profit” metric for ETH surpassed 98% on Thursday, a level not seen in the last two years. This key market sentiment indicator measures the percentage of coins trading above their previous blockchain transaction prices. Analysts classify coins as ‘in profit’ when current prices exceed last transaction prices, and ‘in loss’ when below.
Historically, readings above 95% suggest the market becomes overheated and approaches a local top. Most investors hold unrealized gains, creating strong incentives to sell and realize profits. Conversely, readings below 50% often indicate market bottoms, where widespread losses reduce selling pressure and create buying opportunities.
Statistics from the past two years underscore the potential for a pullback. The metric has crossed the 95% threshold on four separate occasions. Of the three previous instances, two triggered price corrections exceeding 10%, with the most recent pullback slashing prices by over 40%.
Watch for Indicator Drops if ETH Corrects
The current ETH rally was significantly fueled by concentrated buying from Digital Asset Treasury (DAT) companies that began in May. A substantial correction could occur if these major holders decide to take profits en masse, possibly triggered by shifting macro-economic conditions.
Analysts suggest that the “Percent Supply in Profit” indicator should be watched closely if a downturn materializes. A sharp drop in the metric coinciding with a steep price decline has historically served as a reliable signal that the market has formed a short-term bottom.
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