Ethereum Faces 2022-Like Bear Market Challenge: Will ETH Stabilize Despite Persistent Selling Pressure?

As Ethereum (ETH) encounters a market environment reminiscent of the 2022 bear cycle, investors and analysts are closely monitoring whether the asset can establish equilibrium amid ongoing sell-offs. The current market dynamics, characterized by heightened volatility and macroeconomic uncertainties, raise critical questions about ETH’s ability to maintain support levels and attract renewed demand. Key factors under scrutiny include network activity, institutional interest, and the broader crypto market sentiment, which collectively influence ETH’s price trajectory. This analysis delves into the potential scenarios for Ethereum as it navigates these challenging conditions, offering insights into both short-term price action and long-term viability.

Waiting on market exhaustion to catalyze a recovery

The last time Ethereum experienced such significant sell-side pressure was during the 2022 bear market, as evidenced by the Net Realized Profit/Loss (PnL) remaining consistently in the red. 

A comparable aggressive loss realization has unfolded this year, particularly since mid-February, when ETH was trading within the $2.7k–$3k range.

Hence, indicating substantial liquidation activity and capitulation among holders, as Ethereum lost more than 50% of its market valuation, amplifying realized losses across the network.

Source: Glassnode

Unless the metric shifts into positive territory (green), indicating that holders are transitioning from loss realization to profit-taking, true sell-side exhaustion is unlikely to materialize.

Consequently, to catalyze a recovery, a pronounced supply-demand imbalance must emerge. 

In essence, bid-side absorption must outweigh the persistent sell pressure –  restoring confidence among holders and reintroducing favorable conditions for realized profits to return.

Price threshold that could signal Ethereum’s resurgence

According to the Net Realized Profit/Loss (PnL) chart, at the current price of $1,583, approximately 300 million ETH tokens have realized losses, with the realized price at $1,982. 

This suggests that a substantial portion of the market remains underwater, as holders who acquired ETH above $1,982 are currently realizing paper losses. 

A bullish reversal would require price action to surpass the realized price, to prevent mass capitulation. Mathematically, this would necessitate a 20%+ price appreciation from current levels.

However, the path to such a recovery is clouded by rising exchange reserves, with approximately 40 million ETH deposited onto exchanges since the 2nd of April.

Source: CryptoQuant

This influx of supply into exchanges suggests sell-side pressure, reinforcing the prevailing FUD in the market.

Without demand-side absorption, a bullish reversal remains unlikely, leaving Ethereum susceptible to further distribution phases driven by continued realized losses.