A recent report shows that Owner and DeFi helped keep ETH from falling below $ 1,700
The Total Locked Out Value (TVL) on DeFi Smart Contracts is down 35% from its peak.
But the drop in prices hasn’t shaken long-time Ether owners, while the DeFi sector is also a good opportunity for investors.
One report A recent report from Glassnode shows that many long-time ETH holders (> 155 days) are making the most of their profits even though the price of its established ATH has fallen 55% from its established ATH of $ 4,300. They are still consistently profitable, holding paper profits that are around 80% of market capitalization.
Meanwhile, the short-term ETH holders (<155 days) are now seeing their profits dwindling as the index of net unrealized gains and losses enters the break-even zone. That is, the investor who recently bought ETH made a profit on paper, but it has now turned into a loss. After hitting nearly 46% of market cap with unrealized gains, short term owners are now seeing an overall loss of -25% of market cap.
Glassnode adds that losers have a higher chance of liquidation while the STH-NUPL indicator (unrealized net profit of short-term holders) has fallen below zero.
Net Unrealized Profit / Loss (NUPL) looks at the difference between unrealized profit and unrealized loss to determine whether the entire network is currently in a profit or loss state.
Short term ether holder NUPL falls below 0 | Source: Glassnode
Glassnode further noted that “LTH-NUPL is an indicator of the net unrealized gains on Ether that were unchanged during price corrections.” Thus, according to the data analyst, a flat LTH-NUPL shows holders’ intention to take downside risks in the Ether market to accept.
NUPL of long-term ether holders is close to 1 | Source: Glassnode
Can DeFi limit the drop in price of Ether?
LTH-NUPL indices above 1 were last seen during the 2017 and 2018 bull run, which saw the price of ether jump 20.217%. However, the big move up followed with an equally strong sell-off – Ether wiped out nearly 95% of that gain.
The ongoing decline shows long-term owners panicked and sold their ether holdings after their paper profits disappeared.
But that was a time when there was no DeFi like now.
“Unlike previous investments, many of these long-term owners can now put their assets into DeFi. Ether is widely deposited in loan protocols like Aave and Compound, where it currently has over $ 4 billion in deposits. “
Unpaid deposits and loans in Aave and Compound starting Wednesday (June 23) | Source: Dune Analytics
Long-term holders can borrow stablecoins by holding their ether as collateral for the Aave and Compound protocols. As a result, this strategy enables depositors to achieve an attractive return on risk or price speculation.
“These holders can amass governance tokens, increase their stablecoin balances, or buy dips while maintaining the commitment they have in ether as long-term lenders. Deposits and loans at Aave and Compound remain strong. “
With over $ 100 billion lying on DeFi platforms and ETH holders unwilling to liquidate their assets, it is likely that the market will avoid a sharp correction like 2018 for the time being.
According to Cointelegraph