Ethereum has been facing a challenging time in the market recently, with on-chain data showing that the cryptocurrency has broken under all major investor cost basis levels, except for one. This indicates a significant shift in the sentiment surrounding the digital asset, as investors are now holding onto their coins at a net loss.
The Realized Price, an on-chain indicator that tracks the average cost basis of investors within a specific Ethereum cohort, has become a key metric to watch. When the Realized Price is below the spot price of the asset, it suggests that the average holder is in a state of loss. Conversely, if the Realized Price is above the spot price, it indicates that the cohort as a whole is in a state of profit.
Investor cost basis is a crucial aspect of on-chain analysis, as it can influence the decisions made by holders. When the price of Ethereum retests the acquisition level of investors, their reaction can vary depending on whether they are in profit or loss. Holders may choose to accumulate more if the price is falling from a position of profit, supporting the asset and defending their cost basis. On the other hand, investors who are underwater may decide to sell to avoid further losses.
The Realized Price of the entire Ethereum network is currently around $2,250, a level that has historically provided support to the cryptocurrency. However, recent market movements have seen Ethereum’s price significantly drop below this level, indicating that the average holder is now facing substantial losses.
With this major support level breached, attention has now turned to the Realized Price of individual cohorts within the Ethereum network. Data shows that only the largest holders, those with over 100,000 ETH, are still in profit. During the 2022 bear market, these mega whales provided support to Ethereum, and it is possible that this level could once again play a crucial role in determining the cryptocurrency’s price trajectory.
As Ethereum continues to face downward pressure, it will be interesting to see if the Realized Price of these mega whales can act as a support level once again. At present, these large holders have an average acquisition level of $1,290, indicating that further bearish action may be needed before a retest can occur.
In terms of price action, Ethereum is currently trading around $1,500, down more than 16% in the last 24 hours. The market sentiment surrounding the cryptocurrency remains uncertain, with investors closely monitoring key support levels to determine the future direction of Ethereum’s price.
Overall, the on-chain data surrounding Ethereum’s cost basis levels provides valuable insights into the current state of the market and the sentiment of investors. As the cryptocurrency market continues to evolve, these metrics will play an essential role in guiding investment decisions and understanding the dynamics of the digital asset landscape.