On-chain analytics firm Glassnode revealed that the latest Ethereum cycle did not reach the profitability threshold cleared during past bull markets.
Ethereum’s profitability profile turns out to be compressing this cycle
In a new post on X, Glassnode talked about how the supply share currently stands on the Ethereum blockchain, yielding over 300% returns. Below is a chart shared by an analytics company that shows trends in this metric.
The value of the indicator seems to have gone down over the last few years | Source: Glassnode on X
From the graph, we can see that the supply of Ethereum, which is three times the profit, has recently decreased, reaching a level of 11%. This suggests that just over one-tenth of the circulating supply of cryptocurrencies is significantly appreciated at current spot prices.
This low level of supply is, of course, partly due to the market downturn. However, this alone does not explain how low the indicator is. Looking at this graph, it’s clear that the last time this network was below this share of supply was back in February 2017. Profitability has never been this bad during the 2019 and 2022 bear markets.
In fact, bear market levels aren’t the only thing that has changed in the current cycle. In the past two cycles, 3x profit supply exceeded the 50% level during bull phases. During this cycle, the metric never crossed the 30% mark, much less approached the 50% threshold. “ETH’s profitability profile is fundamentally compressed compared to previous cycles,” Glassnoed noted.
In related news, Ethereum and other assets have recently faced sharp drawdowns, with a noticeable impact on profitability for short-term investors. On-chain analytics company Santiment shared data on how various top coins compare in this regard in an X post.
The metric cited by Santiment is the market value-to-realized value (MVRV) ratio, which is a common metric that measures the overall profit and loss situation of holders. Here, the analytics firm specifically used a version of the MVRV ratio that tracks a buyer’s profitability over the past 30 days.
The trend in the 30-day MVRV Ratio for BTC, ETH, ADA, XRP, and LINK | Source: Santiment on X
As shown in the chart above, Ethereum, Bitcoin, and other assets saw their 30-day MVRV ratios drop significantly as the market crash continued. However, the subsequent rebound has made things a little better for buyers than last month.
However, the losses for this group remain significant. The 30-day MVRV ratio currently stands at -10% for BTC and -12% for ETH. The analysis company explained as follows.
When the average trader has significant losses across the network, which typically hovers at 0% (a zero-sum game), selling pressure often dries up as weak hands succumb and long-term investors begin to accumulate.
ETH price
Ethereum fell to near the $1,500 level over the weekend, but has since rebounded and its value is currently hovering around $1,680.
Looks like the price of the coin has bounced back a bit | Source: ETHUSDT on TradingView
Featured image from Dall-E, chart from TradingView.com
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