New report suggests Ethereum and DeFi holders keep ETH from falling below 1.7K

The drop in the price of Ether (ETH) is not shaking long-term owners, while the decentralized financial sector (DeFi) also offers opportunities for investors.

For example, a new Glassnode report suggests that many long-term Ethereum holders (> 155 days) are most profitable, even though ETH / USD is down 55% from peaks above $ 4,300. Meanwhile, short-term Ethereum holders (

“After hitting nearly 46% of market cap with unrealized gains, Short Term Holders are now holding a total loss on paper of -25% of market cap,” wrote Glassnode. “In contrast, long-term owners have remained consistently profitable, keeping paper yields of around 80% of market capitalization.”

Glassnode added that losers are more likely to liquidate their ETH holdings while citing the STH-NUPL indicator (unrealized net profit of short-term holders) which has dropped below 0.

NUPL (Unrealized Net Profit / Loss) examines the difference between unrealized profit and unrealized loss to determine whether the entire network is currently in a profit or loss state.

Glassnode also noted that LTH-NUPL, an indicator of net unrealized profits for long-term holders, remained unchanged during the Ethereum price correction. Thus, according to the data analysis service, a flat LTH-NUPL indicates the owners’ intention to accept downside risks in the Ethereum market.

DeFi to limit Ethereum’s decline?

The last LTH-NUPL indices above 1 were during the 2017-2018 bull run which saw the Ethereu price jump 20.217%. However, the steep upward rally was followed by an equally strong sell-off – ETH / USD wiping out nearly 95% of that gain.

The ongoing decline shows that long-term owners panicked to sell their ETH holdings after their paper profits disappeared.

But in 2018 there was no DeFi sector that could take these holders’ ETH and return it with annual returns like government bonds. Glassnode notes:

“Unlike previous investments, many of these long-term owners can now put their assets into DeFi. ETH is widely deposited in loan protocols like Aave and Compound, where it currently has over $ 4 billion in deposits outstanding.

Long-term holders can borrow stablecoins – tokens pegged to US dollars – by holding their ETH as collateral with the Aave and Compound protocols. As a result, the strategy enables depositors to achieve an attractive risk return or to speculate on the token price

“These holders can amass governance tokens, increase their stablecoin balances, or buy massive discounts while maintaining the level they have with ETH as a long-term lender,” the Glassnode report added. “Deposits and loans in Aave and Compound remain strong.”

Borrowing volatile assets, however, remains a riskier alternative. For example, governance tokens have fallen more than 60% from their peak during the recent downturn. DeFi participants, especially long-time Ethereum holders, are therefore looking for risky income farming opportunities to survive with lower volatility.

With liquidity still strong among DeFi platforms, over $ 100 billion according to data provided by Glassnode, and Ether holders willing not to liquidate their assets, ETH is likely to like the wave discount adjustment 2018 could be avoided in 2021.