Key Points
- Chinese authorities have moved a part of the 542,000 ETH seized in 2018 to exchanges, potentially impacting the market.
- Ethereum’s exchange reserves have hit a three-week high, indicating a potential sell-off.
Chinese authorities have recently transferred 7,000 ETH to various exchanges.
These tokens are part of a larger stash of 542,000 ETH that was confiscated in 2018 from a cryptocurrency Ponzi scheme.
Ethereum’s Market Position
At the time of reporting, Ethereum was trading at $2,401, following a nearly 2% price drop within 24 hours.
This price drop aligns with a general bearish sentiment in the wider cryptocurrency market, with the Fear and Greed Index hitting a seven-day low of 39.
This suggests that traders are currently in a state of fear.
Ethereum investors have additional concerns due to the potential market impact of the possible sell-off of 542,000 ETH, worth over $1.3 billion, by Chinese authorities.
Impending Supply Overhang
Onchain researcher ErgoBTC reports that Ethereum could be facing an unexpected supply overhang.
This is due to the recent move of 7,000 ETH to exchanges, which are part of the 542K ETH seized from the PlusToken crypto Ponzi scheme in 2018.
This scheme had amassed over 194K Bitcoin and 830K ETH by the time it was shut down.
Most of the Bitcoin was likely sold between 2019 and 2020, while a third of the ETH was sold in 2021.
The remaining 542,000 ETH was consolidated into multiple addresses in August 2024.
Some of these coins are now being moved, as evidenced by the withdrawal of 15,700 ETH from these addresses on October 9th.
Nearly half of this amount was deposited into the BitGet, Binance, and OKX exchanges.
The researcher suggests that these transfers are following a similar pattern to when the authorities sold Bitcoin in 2020.
This could potentially lead to increased selling pressure on Ethereum in the coming weeks.
Ethereum’s exchange reserves have reached a three-week high due to these deposits, as per data from CryptoQuant.
In the past 24 hours, the total amount of ETH held on exchanges has risen by over 110,000 tokens, reaching its highest level in three weeks.
This indicates that many traders are moving their coins to exchanges with the intention to sell.
The largest increase in reserves occurred on derivative exchanges, which could lead to a surge in Ethereum’s volatility.
Data from IntoTheBlock also shows an increase in large transaction volumes, suggesting a rise in whale activity.
Given that Ethereum’s price is not increasing despite the rise in large transactions, it could imply that these transactions are sell orders rather than buy orders.
According to Coinglass, these high exchange deposits are having a bearish impact on Ethereum.
More than $31 million worth of ETH was liquidated in the last 24 hours, with $27M being long liquidations.
