On September 5, 2023, data shows that with the decline in ETH price, the percentage of ETH holders experiencing losses has risen to 44%, approaching the highest level since the bear market of 2022 at 50%. So, will this percentage continue to increase? Will more ETH holders suffer losses?
Chart of ETH Holder Loss Percentage (Red) and ETH Price (Black), Source: IntoTheBlock.
Whether there will be more people experiencing losses depends on the price movement of ETH. If the ETH price continues to fall, there will be more people experiencing losses. Conversely, if the ETH price stays sideways or rises, the number of people experiencing losses will remain the same or decrease.
Currently, ETH is still in a rebound trajectory, approaching the first support level at $1,500. In other words, in the short term, there is a possibility of further upside for ETH, but the potential is limited.
Chart of ETH Price Trend from March 2022 to September 2023, Source: TradingView.
So, will ETH fall below the upward trend and head towards the June 2022 low of $880?
Looking ahead, market expectations for cryptocurrencies are primarily focused on BTC spot ETFs and the 2024 halving, while ETH itself does not have any major expectations. Although the London hard fork upgrade is a significant upgrade for Ethereum, it is mainly positive for Ethereum's Layer-2 solutions, and the timing of the upgrade is uncertain. In other words, ETH lacks expectations to drive investor buying.
Furthermore, since the drop from its peak of $4,800 in 2021, ETH has not experienced a narrow-range consolidation similar to the period of 2019-2020, nor has it entered a stage of washout. This means that the distribution of chips is scattered, which is unfavorable for entering a bull market.
Chart of ETH Price Trend from 2018 to 2023, Source: TradingView.
Usually, a prerequisite for a bull market is a prolonged period of washout, where whales control the majority of the chips to achieve market manipulation and price increase. If ETH does not go through washout and directly surges, what consequences may arise?
Whales may face selling pressure during the surge of ETH, which often leads to the failure of their manipulation and themselves becoming bagholders. Although this situation is possible, the probability is very low because whales are not philanthropists - they enter the market to make money, not to give it away. So, it is advisable not to hold on to such fantasies.
In other words, from a market manipulation perspective, ETH is likely to go through a phase where it falls again and reaches the bottom at $880, experiencing a period of flat consolidation without significant fluctuations. This arduous stage is likely to occur in the second half of this year.