Crypto analytics firm Santiment reported that three major cryptocurrencies – Bitcoin, Ethereum, and XRP – currently have very high percentages of their supply held in profitable addresses.
“Bitcoin (83%), Ethereum (84%), and XRPLedger (81%) have their respective supplies in historically high risk profit levels compared to their averages that hover in the 55%-75% range dating back to 2018,” Santiment reported.
What does this mean? Essentially there is a large portion of holders of these cryptocurrencies that are currently sitting on profits from their investments. When supply levels in profit reach very high percentages like this, it puts the cryptocurrencies at risk of increased selling pressure if prices start to fall.
As Santiment notes, the averages for supply in profit for these major cryptos tends to range between 55-75%. So the current levels, hovering over 80%, are approaching historical highs.
If a large correction happens, triggering some of these profitable holders to sell and realize their gains, it could spark a cascade of selling activity and exacerbate any price declines. That downside risk goes up the higher the percentage of profitable supply there is.
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Show more +However, Santiment notes crypto can still climb from here due to positive catalysts like more mainstream exposure from ETF launches and other news. The key metric to watch is if those supply percentages breach back below 75%, which would imply healthier potential for continued long-term upside.
Currently Bitcoin, Ethereum, and XRP are moderately down this week but still trading around $42.8k, $2.5k, and $0.56 respectively. The market will be keeping an eye on holders’ behavior if more significant price dips emerge.
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