Ethereum Faces Key Support Test as Chinese Government Sells 7,000 ETH from PlusToken Scam

1 month ago 1

ARTICLE AD BOX

Ethereum-ETH-silver-coin-next-to-bear-with-trading-chart-in-background

Investors fear a potential sell-off of the 542,000 ETH seized in the PlusToken ponzi scheme triggering another 53% Ethereum price crash further.
With recent movements of these funds, concerns are rising that a large liquidation could push Ethereum’s price below $2,000.

Ethereum price is experiencing downward pressure today, price slipping more than 2% below the $2,400 mark. The decline occurred after the Chinese government reportedly shifted 7,000 ETH, valued at over $16.7 million, to crypto exchanges. This has fueled concerns among investors as the wallets involved are linked to the notorious PlusToken Ponzi scheme.

Chinese Government Selling PlusToken-Linked Ethereum

PlusToken was a large-scale crypto scam operating in 2018 and 2019, affecting around 2.6 million investors. Following the scam’s collapse, Chinese authorities seized over $14 billion worth of cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH).

Analyst ErgoBTC from OXT Research noted that the seized funds had remained dormant for nearly three years before the latest transfers. This recent transfer has sparked speculation that the Chinese government may be preparing to offload a larger portion of its Ethereum holdings. A total of 542,000 ETH, worth an estimated $1.3 billion, was confiscated during the PlusToken investigation.

Investors fear that if the government decides to sell these assets, the Ethereum price could face substantial downward pressure. Earlier, after the collapse of the scheme, authorities liquidated a significant portion of the seized Bitcoin between 2019 and early 2020, leading to a notable sell-off.

At that time, the BTC market cap was $160 billion, and the liquidation, totaling $1.3 billion in BTC, caused significant disruption. However, while Bitcoin saw major liquidations, Ethereum holdings remained largely untouched until mid-2021.

In the summer of 2021, approximately one-third of the 840,000 ETH seized from the PlusToken scheme was moved to a lesser-known exchange, Bidesk, and eventually sold. Since then, the remaining ETH worth $1.3 billion has been spread across various ‘mixing’ addresses.

The renewed activity has put the market on edge. On Wednesday, ErgoBTC highlighted that the 7,000 ETH moved recently might be part of a larger sell-off, stating, “Given the recent effort to re-obfuscate the ETH, it is unlikely that the active distribution of the 15.7k ETH moved yesterday is the last of the 540k ETH supply distribution.”

Ethereum Price To Drop?

Comparisons have been drawn to a similar event earlier this year, when the German government sold Bitcoin which led to major downward pressure, as reported by CNF. Although that sale involved a smaller volume of BTC, it negatively impacted investor sentiment.

Should the Chinese government liquidate its 542,000 ETH holdings, the impact on the Ethereum price could be severe. There’s a possibility of the price falling below $2,000. Moreover, in the past week, Ethereum whale holders, who had been inactive, also began selling their holdings, per the CNF report.

Furthermore, ETH’s long liquidations touched $27.72 million in the last 24 hours, according to Coinglass. This additional sell pressure further weighs on the Ethereum price movement. Analyst Ali Martinez recently warned that if Ethereum price drops below $2,250, it could trigger another 53% decline from there.

Each time #Ethereum breaks above the TD setup resistance trendline , a strong bull run follows. But when $ETH breaks below the TD setup support trendline , we've seen an average 53% correction.