Recent online reports have highlighted that the Chinese government has initiated the transfer of thousands of Ether (ETH) seized from the infamous $4 billion PlusToken crypto Ponzi scheme. This development has sparked significant concern among Ethereum investors, who fear the potential for a large-scale sell-off that could impact the market.
Investor Fear Over Potential ETH Selling Spree
On Wednesday, a user on the X platform raised an alert that marked a significant move by the Chinese government. For the first time in three years, Ether seized from the PlusToken Ponzi scheme has been moved from addresses that have remained dormant since 2021. This activity began in early August when wallets linked to these seized assets transferred approximately 2,800 ETH, valued at about $6.5 million, to a single wallet. This action has heightened concerns over a possible sell-off.
The latest on-chain activity from these wallets suggests that the selling process may have already started. On Tuesday, around 15,700 ETH were transferred across multiple wallets, potentially to obscure the tracking of these tokens. From this amount, over 7,000 ETH, valued at approximately $16.7 million, were sent to several exchange deposit addresses, where they were presumably sold.
Following the collapse of PlusToken, the Chinese government seized an estimated $4.2 billion in crypto assets, including 840,000 ETH, which was worth $215 million at that time. Most of these assets remained untouched until 2021 when about a third of the seized Ether was transferred to the now-defunct crypto exchange Bidesk and reportedly sold. Subsequently, this Ether was dispersed across numerous “mixing addresses” before being consolidated into a new set of 294 addresses this past August.
According to reports, the Chinese government still holds around 542,000 ETH, which is currently valued at over $1.3 billion. This situation is reminiscent of the significant selling pressure observed during the government’s Bitcoin (BTC) sell-off in 2020, which equated to a sell pressure of approximately $10 billion today. A recent post on X suggested that the recent efforts to obscure these ETH movements imply that the distribution of the remaining 540k ETH has yet to conclude, further fueling investor worries about a potential sell-off.
Ethereum Foundation’s Latest Moves Add to Market Uncertainty
The actions of the Chinese government are not the only factors stirring concern among investors. Recent analyses by on-chain data firms have revealed that the Ethereum Foundation has also been active in the market, contributing to the selling trend. Reports indicate that the Ethereum Foundation’s wallets have moved approximately $3.21 million in Ether this week. Notably, one of these wallets transferred 1,250 ETH to the crypto exchange Bitstamp on Tuesday, while another wallet sold 100 ETH in exchange for 242,828 DAI on Wednesday.
Ethereum’s co-founder, Vitalik Buterin, has previously addressed his on-chain activities, which have occasionally led to bearish sentiment among investors. In the past 24 hours, Ethereum has experienced a 2% price decline, dropping below the critical $2,400 support level.
Crypto analyst Ali Martinez has commented on Ethereum’s current market performance. Martinez observed, “Each time Ethereum breaks above the TD setup resistance trendline, a strong bullish trend follows. However, when ETH falls below the TD setup support trendline, the market has historically seen an average correction of 53%.” Based on these observations, the analyst suggests that the next significant support level to monitor is $2,250. Falling below this level could trigger a substantial price drop. As of now, ETH is trading at $2,383.
In conclusion, the ongoing developments regarding the movement of seized Ether by the Chinese government, coupled with the Ethereum Foundation’s market activities, have intensified the level of uncertainty within the Ethereum market. Investors are advised to remain vigilant and consider these factors when making informed decisions about their investments.
