Ether has made gains of almost 2% in the past 24 hours, despite major tokens, including bitcoin, posting sharp pull-backs. However, on-chain analysis points to possible short-term price correction risks that could impact the second largest digital asset by market cap.
Since the Securities and Exchange Commission approved multiple spot bitcoin ETFs on Wednesday, ether has rallied above the $2,600 mark. According to The Block’s Price Page, ether was changing hands for $2,651 at 11:44 a.m. ET.
Ether supply in profit increases risk of short term price correction, analyst said. Image: The Block.
Ether price correction risks
However, The Block’s Data Dashboard shows the circulating supply of ether in profit is currently 89.4%, which is a high not seen since 2021. The elevated supply in profit could encourage traders to take profits, affecting the price of the digital asset in the short term.
One analyst pointed to factors that support a bullish outlook for the native token of the Ethereum ETH +2.79% network. The recent SEC approval of a spot bitcoin ETF has encouraged speculation that a spot ether ETF could also happen in the near future, Head of Research at ETC Group André Dragosch told The Block. He said that such an eventuality would prove bullish for the second largest digital asset by market cap.
Dragosch also said that the recent high in ether circulating supply in profit could also be seen as a stabilizing factor for the token.
“The reason is that there tends to be less incentives to sell the asset in these conditions, especially by longer term holders. However, weak holders might still be inclined to take profits, but net it is definitely supportive for an ongoing bull market,” he added.
