Ethereum: Profit-Taking Surge Amid Declining Holder Accumulation – Market Outlook

Ethereum Breaks Resistance: Can the Rally Continue Despite Profit-Taking?

Ethereum [ETH] has demonstrated strong upward momentum over the weekend, surging by 4.09% and successfully defending the crucial $3,700 support level. The leading altcoin has not only held its ground but also surpassed the $3,860 local high established on July 21st, signaling a potential continuation of the bullish trend.

This price movement marks a breakout from a recent short-term trading range. however, the relatively low trading volume accompanying this breakout raises questions about its sustainability.

Technical indicators offer a mixed perspective. The Commodity Flow Index (CMF) currently reads at 0.0, suggesting a lack of significant buying pressure. Conversely, the Moving Average Convergence Divergence (MACD) confirms the bullish momentum driving the breakout. If the upward trajectory continues, the next key resistance level to watch is $4,100.

Holders in Profit – A Potential Headwind?

On-chain data reveals a significant percentage of Ethereum holders are currently in profit. Adding to this, the holder accumulation ratio has experienced a slight dip in recent days. This could indicate the market is becoming overextended and ripe for a potential correction, as holders may begin to realize profits.

Why Ethereum Might Still Have Room to Run

Despite these potential headwinds, several factors suggest Ethereum’s rally may not be over yet.The breakout above the previous high, coupled with the bullish signal from the MACD, indicates underlying strength. While profit-taking is a natural part of market cycles, the overall bullish sentiment and potential for further adoption could outweigh these concerns.

[Image of Ethereum 4-hour Chart]
Source: ETH/USDT on TradingView

[Image of Ethereum Holder Accumulation Ratio]
Source: Santiment

Investors will be closely monitoring trading volume and the holder accumulation ratio in the coming days to gauge the strength and longevity of this latest rally. The $4,100 resistance level will be a critical test for Ethereum’s bullish ambitions.

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Ethereum (ETH) is currently navigating a complex market dynamic, characterized by a noticeable increase in profit-taking activity alongside a slowdown in long-term holder accumulation. This confluence of factors is creating a pivotal moment for the second-largest cryptocurrency, impacting its short-to-medium term price trajectory. This analysis dives deep into the data, exploring the implications for investors and outlining a potential market outlook for the remainder of 2025. We’ll cover Ethereum price prediction, ETH market analysis, and strategies for navigating this evolving landscape.

The Rise in Profit-Taking: A Data-Driven Overview

Recent on-chain data reveals a important uptick in ETH being moved from long-held wallets to exchanges. This suggests a wave of investors, particularly those who entered the market during the 2020-2021 bull run, are realizing gains. Several key metrics support this observation:

Realized Profit: Data from Glassnode indicates a substantial increase in realized profit in Q2 2025, surpassing levels seen in the previous six months. This metric tracks the profit taken by holders when ETH is spent.

Exchange Inflow Volume: Exchange inflows of ETH have risen by approximately 25% in the last quarter, indicating increased selling pressure. This is a critical indicator for cryptocurrency trading.

Short-Term Holder Behaviour: Short-term holders (those holding ETH for less than 155 days) are exhibiting a higher propensity to sell, contributing to the overall profit-taking trend. This contrasts with the behavior observed during the early stages of the year.

Network Profit to Value Ratio (NPVR): The NPVR, which measures the ratio of realized profit to market capitalization, has climbed above 1, signaling a potential overbought condition and increased risk of correction.

This profit-taking isn’t necessarily a negative signal in isolation. It’s a natural part of the market cycle, especially after substantial price recognition. however, when coupled with declining accumulation, it warrants closer scrutiny.

Declining Holder Accumulation: A Worrying Trend?

Together, the rate at which long-term ETH holders are adding to their positions has slowed considerably. This decrease in accumulation suggests waning conviction among core believers in Ethereum’s long-term potential.

Long-Term Holder Supply: The supply held by long-term holders (those holding ETH for over 155 days) has plateaued in recent weeks, indicating a pause in accumulation.

Entity-Adjusted Supply: Analyzing entity-adjusted supply (grouping wallets controlled by the same entity) reveals a similar trend – a slowdown in net accumulation.

Decreasing Active Addresses: While not a direct measure of accumulation, a slight decrease in the number of active Ethereum addresses suggests reduced network activity and perhaps less organic demand.

Staking Dynamics: While Ethereum staking remains popular, the growth rate of staked ETH has also slowed, potentially indicating a reluctance to lock up ETH for the long term amidst market uncertainty.

The combination of increased selling and reduced buying pressure creates a delicate balance. A sustained decline in accumulation could exacerbate the impact of profit-taking, leading to a more significant price correction.

Impact of the Dencun Upgrade & Layer-2 Solutions

The Dencun upgrade, implemented in March 2025, aimed to considerably reduce Layer-2 (L2) transaction fees through proto-danksharding. while the upgrade was triumphant in lowering costs, its impact on ETH price has been less pronounced than initially anticipated.

L2 Activity: L2 networks like Arbitrum, Optimism, and Base continue to experience growth in transaction volume and total value locked (TVL). However, this growth hasn’t translated into a proportional increase in ETH demand.

Fee Burn Rate: The Dencun upgrade did increase the ETH burn rate, making ETH deflationary. However, the increased burn hasn’t fully offset the supply from block rewards and transaction fees.

Competition from Choice L1s: The emergence of competing Layer-1 blockchains (e.g.,Solana,Avalanche) is diverting some activity and capital away from the Ethereum ecosystem. This is a key factor in blockchain technology competition.

Real World Asset (RWA) Tokenization: The growing trend of RWA tokenization on Ethereum is a positive development, potentially driving long-term demand. However, the impact is still unfolding.

Market Outlook & Potential Scenarios (July – December 2025)

Given the current market conditions, several scenarios are plausible for Ethereum’s price performance in the coming months.

Scenario 1: Consolidation & Sideways Trading (Most Likely – 50% Probability)

ETH price consolidates between $3,500 and $4,500.

Profit-taking continues,but is offset by continued demand from L2 activity and RWA tokenization.

Accumulation remains subdued,preventing a significant breakout.

Key Support Levels: $3,500, $3,200

Key Resistance Levels: $4,500, $4,800

Scenario 2: Moderate Correction (30% Probability)

ETH price experiences a 15-25% correction, falling to the $2,800 – $3,200 range.

Profit-taking intensifies,and declining accumulation accelerates the downward momentum.

Macroeconomic factors (e.g., interest rate hikes) contribute to the sell-off.

Key Support Levels: $2,800, $2,500

Key Resistance Levels: $3,500, $4,000

Scenario 3: Bullish Breakout (20% Probability)

ETH price breaks above $4,800 and initiates a new uptrend.

Accumulation resumes, driven by renewed institutional interest and positive news regarding Ethereum’s scalability and adoption.

The broader cryptocurrency market experiences a bullish rally.

Key Support Levels: $4,500, $4,200

Key Resistance Levels: $5,000, $5,500

Practical Tips for Navigating the current Market

Diversification: Don’t put all your eggs in one basket. Diversify your cryptocurrency portfolio across multiple assets.

Dollar-Cost Averaging (DCA): Invest a fixed amount of ETH at regular intervals,regardless of the price. This helps mitigate risk and smooth out your average purchase price.

Risk Management: Set stop-loss orders to limit potential losses.

Stay Informed: Continuously monitor on-chain data, market news, and regulatory developments.Utilize resources like Glassnode, Nansen, and CoinGecko for crypto market data.

Consider Staking: If you believe in Ethereum’s long-term potential, consider staking your ETH to earn rewards. However, be aware of the risks associated with staking, such as slashing.

* Focus on Fundamentals: Evaluate Ethereum’s underlying technology, adoption rate, and developer activity.

Case Study: The Impact of Previous Profit-Taking Events

Looking back at the 2021 bull run, similar patterns of profit-taking emerged after significant price increases. In may 2021, a substantial wave of selling pressure led to a 50% correction in ETH price. Though,this correction was followed by a period of renewed