Ethereum’s Second Quarter Performance Signals Tough Times Ahead

Ether’s value against the US dollar steadily fell in the second quarter, with the price of the leading altcoin declining nearly 70% over the 3-month period. The ETH/USD pair followed an almost constant decline, except for slight relief breaks, falling from just above $3,500 to $1,060 on the last day of June.

ETH Q2 Bulletin: The worst posting ever

The quarterly performance is the worst ever for Ethereum since its launch in 2015, according to data from Coinglass. Ether’s monthly return in June was -44.79%, which is the biggest monthly red candle in history and only the second time the token has printed monthly losses of over 40% since November 2018.

Also of note, Ethereum posted negative returns for three consecutive months for the first time since April 2018. Back then, it bled for seven consecutive months.

Ethereum suffers as much as Bitcoin

In a report published on June 24, Glassnode analyzed the statistical extent of capital destruction on the Ethereum network in the ongoing bear market. Glassnode analysts recounted that just like Bitcoin – whose performance the report also featured – ETH has seen an increase in investor liquidation and massive unrealized losses.

The blockchain data and intelligence platform noted that the two market-leading assets are additionally trading below all-time highs from their previous cycle for the first time in history. Specifically for Ethereum, Glassnode explained that the token’s massive pullback from its ATH disproves any argument that previous spikes could be used to determine its support level in the ongoing bear market.

BTC dominance a sign of ETH underperformance

Glassnode found that historically, Bitcoin has traded below realized price for 13.9% of its lifetime, compared to a larger 37.5% in the case of ETH. The realized price generally indicates the severity of capital outflows from the markets and the intensity of realized losses. This means that ETH traders “generally” have to deal with more periods when their tokens are trading below their respective purchase prices.

The sighting aligns with a previously seen market trend in which Bitcoin outperforms Ethereum in the bear market. The realized cap, a metric aggregating the value of tokens and their price during the last transaction, also shows that ETH has lagged behind BTC in this bear market.

Unrealized losses & MVRV

As investors struggle to deleverage their holdings from the decentralized financial ecosystem, ETH prices have pushed them into unrealized losses. MVRV also shows even more intense pressure on Ether staked on the Beacon chain – which was last spotted at 55% of the mark. The on-chain data also indicates that bettors are deeply entrenched in unrealized losses compared to the average investor.

Meanwhile, the profitability of transactions on Ethereum remained low. Overall, investors are seeing double-digit losses per trade – such a lack of profitability was last seen in the bear market of 2018.

Pangea Fund CEO: Prepare for testing times as Ethereum (ETH) has yet to capitulate

Daniel Cheung of the Pangea Fund recently added a voice to projections that Ether has yet to find bottom in a series of tweets. The fund manager warned that ETH investors should watch out for an impending wave in the market. Cheung speculated that the altcoin could potentially see even worse performance over the next two months. He added that real capitulation has yet to reach the broader market, which he says is in a phase where prices are heavily influenced by macro factors such as Federal Reserve policy and inflationary concerns.

“ETH will likely only be a leveraged, liquid bet on the Nasdaq for at least the next 2 months […] I believe there is a very favorable 2-month short opportunity ahead at ~$1200 ETH. Remember to enter with protection – I suggest setting $1300 as a point to cover the short,” he wrote.

Meanwhile, Ether balance on exchanges revisited April levels with data and analytics platform Glassnode, noting that the figure hit a 3-month high of 21,581,770 ETH on June 29.

The picture is different for Bitcoin, whose balance on exchanges has shrunk and recently hit a 3-year low of 2,384,477 BTC as the price of the asset fell to an 18-month low.

This observation has suggested in the past that many holders are withdrawing their assets from exchanges, which often implies higher buying demand in the market. However, at present retail and institutional investors have reasonably low expectations with the macro economy still weak and no significant catalyst in sight. Several analysts agree that Ethereum and Bitcoin will test even lower levels in the near term, with a return to triple-digit price in prospect for the former.

To learn more about Ethereum, see our Investing in Ethereum guide.

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