Ethereum has recently seen a significant decline in the percentage of its tokens that are in profit, hitting a four-month low. As the cryptocurrency market faced a downturn, Ethereum, which has long been considered the leader in the altcoin space, has struggled to maintain momentum. While some altcoins, such as Solana and XRP, have stood out in the current market cycle, Ethereum has not shown the same level of performance, and this has been reflected in its on-chain data.

The key metric highlighting Ethereum’s recent underperformance is the drop in the “supply in profit.” According to on-chain analytics firm Santiment, the percentage of Ethereum tokens in profit has steadily decreased in the last few weeks. This metric is crucial as it reveals the amount of Ethereum held by investors that was purchased at a price lower than its current value. As of early February 2025, this number is at its lowest point since November 2024, indicating a significant portion of Ethereum’s holders are now in the red.

The supply in profit is a critical metric used to measure the market’s overall health. Ethereum’s market capitalization has dropped by over 36% since its peak at $4,016 in mid-December, which has played a major role in the decline of the supply in profit. At the time of writing, data from Santiment shows that only around 97.7 million Ethereum tokens are currently in profit, marking the lowest level since the night of the U.S. presidential election in 2024. This drop is particularly notable when compared to the 97.5% of the supply that was in profit in early December 2024.

Along with this decline, the percentage of the total Ethereum supply in profit now stands at just 65.5%, another low not seen since October 2024. This decrease signals that a larger portion of Ethereum holders are now experiencing losses, contributing to a bearish outlook on the cryptocurrency. The negative sentiment surrounding Ethereum has caused many retail traders to offload their tokens, exacerbating the downward trend in its price.

However, despite these bearish indicators, Santiment remains optimistic about Ethereum’s future. In a recent post, the analytics firm highlighted that when a smaller percentage of a token’s supply is in profit, long-term holders tend to dominate the market. This could indicate that the speculative and retail-driven selling pressure may have subsided, potentially paving the way for more stable market conditions.

Long-term holders, who have weathered the recent downturn, may now be in a better position to support the price and potentially trigger a rebound. While Ethereum’s market capitalization has taken a hit, it’s important to note that the current situation may just be a phase of consolidation before a potential upward trend. As fewer tokens are in profit, the market could see less selling pressure, allowing Ethereum to find a stronger support level and prepare for a recovery.

As of now, Ethereum’s price stands just above $2,600, reflecting a modest increase of over 2% in the past 24 hours. This may signal that, despite the challenges, there could be room for a potential price recovery if the market stabilizes and long-term holders continue to dominate. Ethereum’s path ahead may be uncertain, but if it can regain market confidence and shed its recent losses, it might return to its former strength.

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