Chinese authorities moved 7,000 ETH to exchanges in the past 24 hours. These coins are part of the 542,000 ETH seized from a cryptocurrency Ponzi scheme in 2018 and may be dumped on the market.
Ethereum (ETH) was trading at $2,401 at the time of writing, after dropping nearly 2% in price in 24 hours. This decline is in line with the overall bearish mood of the crypto market, with the Fear and Greed Index falling to a seven-day low of 39, suggesting that traders are in a state of fear.
But Ethereum holders have more to worry about, as 542,000 ETH worth more than $1.3 billion could be sold by Chinese authorities.
Ethereum’s “unexpected” oversupply
According to on-chain researcher ErgoBTC, ETH is facing an unexpected oversupply after 7,000 ETH was moved to exchanges. These tokens are part of the 542K ETH seized from the PlusToken crypto Ponzi scheme in 2018.
The scheme accumulated over 194,000 Bitcoin (BTC) and 830,000 ETH before its closure. The majority of Bitcoin is believed to have been sold between 2019 and 2020, and a third of ETH was subsequently sold in 2021.
The remaining 542,000 ETH was consolidated into multiple addresses in August 2024. According to researchers, some of these coins are currently on the move.
On October 9th, 15,700 ETH was withdrawn from these addresses, and nearly half of it was deposited into BitGet, Binance, and OKX exchanges.
Researchers say the transfers are following a similar pattern to when authorities sold Bitcoin in 2020. This puts ETH in a volatile situation where selling pressure could increase significantly in the coming weeks.
Ethereum foreign exchange reserves hit three-week high
These deposits caused Ethereum foreign exchange reserves to surge to a three-week high, as seen on CryptoQuant.
In the past 24 hours, the total number of ETH held on exchanges has increased by more than 110,000 tokens, reaching its highest level in three weeks.
Source: CryptoQuant
This data shows that many traders are moving their coins to exchanges with the intention of selling them. Additionally, the largest increase in reserves occurred on derivatives exchanges. This could cause Ethereum’s volatility to spike.
IntoTheBlock data also shows a large spike in trading volume, suggesting increased whale activity. Given that Ethereum is not making profits despite the increase in large trades, these trades may suggest that it is on the sell side rather than the buy side.
Source: Into the Block
Liquidation data shows that these high exchange deposits are having a bearish impact on Ethereum. According to Coinglass, $31 million worth of ETH was liquidated in the past 24 hours, of which $27 million was long-term liquidation.
Next: Bitcoin on an important psychological level: Will BTC’s history cause a rally?
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