Ethereum Traders Capitulate As Rally Slows Down: Why This Is Good
August 31 2023 - 3:00PM
NEWSBTC
On-chain data shows that Ethereum traders are capitulating
following the slowdown of the rally, something that may turn out to
be positive. Ethereum Traders Are Selling At A Loss Right Now
According to data from the on-chain analytics firm Santiment, ETH
investors are getting increasingly frustrated as they are now
participating in significant loss-taking. The relevant indicator
here is the “ratio of daily on-chain transaction volume in profit
to loss,” which, as its name already implies, compares the
profit-taking volume to the loss-taking volume for any given
cryptocurrency. This metric works by going through the on-chain
history of each coin being sold/transferred to see the price at
which it was previously moved. If this last selling price for any
coin was less than the current spot price, then that particular
token is now being sold at a profit. Naturally, the sale of this
coin would count under the profit-taking volume. Similarly, the
opposite type of coins would contribute towards the loss-taking
volume. Now, here is a chart that shows the trend in this ratio for
some of the top assets in the cryptocurrency sector over the past
few months: Looks like the value of the metric has been negative
for most of these coins in recent days | Source: Santiment on X
When the value of this metric is positive, it means that the
profit-taking volume outweighs the loss-taking volume right now. On
the other hand, negative values suggest the dominance of
loss-taking in the market. From the chart, it’s visible that many
of these top assets have seen negative values of the indicator
recently as the rally that began following the Grayscale news has
slowed down. Related Reading: Bitcoin Sentiment Returns To Neutral,
Will Traders Embrace Greed Next? Ethereum, however, stands out
among these coins as the indicator’s value for the asset is
significantly more negative than the likes of Bitcoin and Cardano,
who are observing loss-taking volumes that are only mildly more
than the profit-taking ones. At the metric’s current value, the
Ethereum investors are making loss-taking transactions at a rate
nearly double that of the profit-taking ones. This difference
between ETH and the other top assets would suggest that the coin
traders are showing the least amount of patience. This could be
because they don’t think the cryptocurrency would continue its
rally anymore, or if it does, the profits wouldn’t be as large as
for some of the other altcoins, so they may be exiting here at
losses to go to greener pastures. This high amount of loss-taking
could, however, actually turn out to be beneficial for Ethereum.
Historically, whenever investors have participated in capitulation,
rebounds in the price have become more probable. Related Reading:
$28,100 Next Level To Break For Bitcoin, Here’s Why The likely
explanation behind this pattern may be the fact that investors pick
up the coins that these relatively weak hands sell with a stronger
conviction, who provide a better foundation for a sustainable price
surge. It remains to be seen whether Ethereum can use this
capitulation to bounce off towards higher levels or if the rally
will remain muted for a while longer. ETH Price At the time of
writing, Ethereum is trading around $1,700, up 3% in the last week.
ETH has been moving sideways since the surge | Source: ETHUSD on
TradingView Featured image from Kanchanara on Unsplash.com, charts
from TradingView.com, Santiment.net
Mina (COIN:MINAUSD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Mina (COIN:MINAUSD)
Historical Stock Chart
From Jul 2023 to Jul 2024