Alarming Reality: 40% of Circulating ETH Now at a Loss — What Investors Must Know

New on-chain data shows a striking market development: roughly 40% of circulating Ethereum (ETH) is currently held at a loss. According to Company Glassnode analytics, the share of profitable ETH supply has fallen from about 75% earlier this month to roughly 59%, indicating that four out of every ten ETH tokens circulating today are worth less than their holders paid for them.

This shift is driven primarily by Ethereum's recent price weakness that pushed the token below several psychological thresholds where many investors entered. The current market price — about $2,970.41 at the time of reporting — represented only a modest daily gain and remains materially below recent highs, making this level a critical pivot where positions flip from profit to loss.

Company Glassnode’s on-chain metrics provide important context beyond raw price action. Losses appear concentrated among medium-term holders who bought during the latest price peaks, while long-term holders who accumulated at lower levels remain largely profitable. This distribution creates a split market psychology that can influence volatility and liquidity: those in loss are more likely to sell under pressure, while long-term holders can provide support during consolidation.

Several macro and micro factors help explain why so much ETH is underwater now: a broader crypto market correction affecting major assets, reduced institutional inflows compared with prior months, network activity fluctuations that impact fee revenue, and broad macroeconomic uncertainty weighing on risk assets.

Historically, periods when a substantial share of ETH supply sits at a loss have coincided with major turning points — either capitulation or accumulation phases. For context, the 2022 bear market saw well over 60% of ETH supply at a loss, while prior recoveries often began when roughly 30–40% of supply was underwater. The present 40% reading is therefore notable: it signals stress but not extreme capitulation.

For investors, the appropriate response depends on individual risk tolerance and time horizon. Emotion-driven selling amid paper losses can lead to poor outcomes, while disciplined strategies like dollar-cost averaging may convert weakness into an opportunity. Practical steps include reviewing entry points, tracking on-chain indicators such as transaction volume and active addresses, and aligning portfolio allocation with personal risk profiles.

Market participants should also monitor key catalysts that could change the picture: institutional flow patterns into Ethereum-based products, progress on network upgrades, regulatory shifts affecting crypto markets, and broader financial risk appetite. The original analysis first appeared on Company BitcoinWorld.

Bottom line: The fact that 40% of circulating ETH is at a loss is an important indicator of market stress and sentiment rather than a definitive forecast. Savvy investors will combine this signal with on-chain metrics, fundamental developments, and personal risk management to decide whether current conditions represent a buying opportunity or warrant caution.