Over 90% of Ethereum’s circulating supply is now in a state of profit, which could mean a significant bearish move is coming in the near future, as the last time this happened the price of ETH dropped from $925 to $380 in 2018.

According to research and analytics firm Glassnode, the percentage of the second-largest cryptocurrency’s supply that is now in a state of profit has hit levels it hadn’t seen since early 2018,  after being roughly two years below the $300 mark.

Ethereum is currently trading at #390 after testing the $400 mark this week. The cryptocurrency’s price has been steadily rising over the last few weeks, as demand for ETH increases amid growing interest in the decentralized finance (DeFi) space.

The DeFi space has seen the total value locked in it skyrocket to over $4.3 billion in the last few months, as investors lend and borrow cryptoassets on DeFi protocols in a bid to farm yield, thanks to the distribution of governance tokens to users who interact with these protocols.

Spartan Group’s co-founder Kelvin Koh, on the other hand, pointed to the development of Ethereum’s upcoming 2.0 upgrade as a reason for investors to be moving into the second-largest crypto by market capitalization. The cryptocurrency has been steadily growing over the last 12 months, so much so it significantly outperformed bitcoin itself.

Data shared by cryptoasset data aggregator CryptoCompare shows that in a year the price of ether went up over 73.8%, while the price of bitcoin only moved up 1.63%. In the recent rally, ETH led the crypto market instead of BTC, which is usually the first crypto to move up when the market sees widespread gains.

Some of these gains could be about to disappear, however, as data shows the last time over 90% of ether’s circulating supply was in a state of profit the cryptocurrency’s price plummeted from $925 in February 2018 to a low just under $380 in April of that year.

If history repeats itself, ETH holders could soon face another sell-off. The sell-off could be an abrupt one, as over this past weekend the price of bitcoin broke through the $12,000 resistance for the first time since January 2018, only to fall sharply in the next few minutes.

Ether moved similarly during the weekend, hitting an intraday high of $414 before plummeting to $344 because of the sell-off. Crypto traders are no strangers to abrupt sell-offs, so much so that in June 2017 ETH briefly crashed from $319 to $0.10 in seconds on GDAX, because of a multimillion dollar trade.

Cryptocurrency exchanges have evolved since then. In a note sent to CryptoGlobe, OKEx revealed that while the crypto market saw the sudden wipeout of nearly $20 billion from its market cap, it stood out by completely avoiding ADL or clawbacks during the crash. It pointed to its proprietary liquidation engine, positions limits, and tiered margin trading system for its success. The exchange’s CEO Jay Hao stated:

This weekend’s price action was wholly unexpected catching even some of the most experienced traders off-guard. Yet, we have learned from experience how volatile Bitcoin can be. This is why OKEx has worked hard to provide our users with a comprehensive risk management system. Unlike other exchanges, we’re pleased to report that the flash crash on both Bitcoin and Ether resulted in zero clawbacks and zero ADL.

It’s worth noting that during the weekend crash, over $1 billion worth of futures positions were liquidated across several major cryptocurrency exchanges.

Featured image via Pixabay.