Bitrabo Editorial
Recent online sources indicate that the Chinese Government has started transferring thousands of Ether (ETH) obtained from a major crypto Ponzi scheme valued at $4 billion. This has raised alarms among Ethereum investors about a potential significant sell-off in the market.
Concerns Over Potential ETH Sell-Off
On Wednesday, a user on X pointed out that the Chinese Government has moved seized Ether from the PlusToken Ponzi scheme for the first time in three years. The wallets holding this Ether had been inactive since 2021.
The activity began in early August, when several wallets associated with these seized assets transferred 2,800 ETH, equivalent to approximately $6.5 million, to a single wallet, raising suspicions of a looming sell-off.
Recently, the wallets took significant actions, moving around 15,700 ETH between various wallets in what appeared to be an attempt to obscure the tokens’ tracking.
Of the total 15,700 ETH, over 7,000 ETH, worth about $16.7 million, was reportedly directed towards several exchange deposit addresses and likely sold shortly after.
After the PlusToken scheme’s demise, around $4.2 billion worth of crypto, including 840,000 ETH, was seized by the Chinese government. Much of this Ether remained untouched until 2021 when a portion was sent to the now-defunct exchange Bidesk and supposedly liquidated. After that, the ETH remained in various “mixing addresses” until it was consolidated in a new set of wallets this August.
Current reports indicate that the Chinese government retains around 542,000 ETH, valued at over $1.3 billion. The past sale of seized Bitcoin by the government in 2020 saw significant market pressure, which would be akin to about $10 billion in today’s terms.
The recent re-obfuscation efforts regarding the ETH suggest that the distribution of the 15.7k ETH moved recently is unlikely to be the final movement from the remaining 540k ETH, further heightening concerns among investors about potential sell-offs.
Ethereum Foundation Involvement
Besides the government activity, another concern for investors comes from the Ethereum Foundation’s recent actions. On-chain analytics have shown that the foundation has engaged in selling this week.
Reports highlight that wallets associated with the Ethereum Foundation have liquidated approximately $3.21 million recently. For instance, one address transferred 1,250 ETH to the crypto exchange Bitstamp, while another wallet sold 100 ETH for 242,828 DAI on Wednesday.
Vitalik Buterin, Ethereum’s co-founder, has previously clarified some of his on-chain activities, which have cast a shadow of bearish sentiment among investors. Ethereum’s price has dipped by 2% recently, dropping below the $2,400 support level.
Crypto analyst Ali Martinez commented on Ethereum’s situation, noting that a breakout above the resistance trendline often leads to strong gains. However, breaking below the support trendline could lead to an average correction of 53%.
In light of this, he mentioned that the next important support level to monitor is $2,250, as falling below this point could lead to a significant price decline. As of now, ETH is trading at $2,383.
