Ethereum, the second-largest asset by market capitalization, is currently under intense selling pressure as inflows of ETH into centralized exchanges increase. Typically, an increase in ETH inflows to exchanges correlates with more sell-off activity and negatively impacts asset prices.
ETH inflows to exchanges increase
According to Tracker Santiment’s on-chain data, large amounts of ETH deposits are flowing to centralized exchanges, indicating increased short-term selling pressure on the asset.
ETH supply on exchanges | Source: Santiment
As shown in the chart above, ETH supply increased from 12.53 million on April 19, 2023 to 12.87 million on May 6. During the same time frame, the price dropped from $2,000 to $1,895.
Interestingly, experts noticed a spike in selling pressure on Coinbase (one of the largest centralized exchanges), with the Ethereum Foundation moving $30 million in ETH for sale.
KOL and trader Andrew Kang believe Following the Ethereum Foundation’s move, market participants responded by selling or shorting $1 billion in ETH.
ETH whales panic selling
Ethereum whales are showing signs of panic after Vitalik Buterin and the Ethereum Foundation dumped large holdings. Recently, two significant Ethereum whales dumped a total of 19,090 ETH (worth ~$35.7 million) on Uniswap after the Ethereum Foundation committed 15,000 ETH ($29.7 million) to Kraken.
The massive sale sent shockwaves throughout the ethereum community and raised concerns among investors. Panic was sparked when the first whale (identified as 0x6071) exchanged 9,950 ETH for 18.63 million DAI at a price of $1,873/ETH. Not long after, the whale 0x7641 exchanged 9,140 ETH for 17.07 million DAI at a price of $1,867/ETH.
These two massive transactions left ETH holders on the edge and prompted a surge in selling activity outside of whale pools.
Market makers participate in the distribution, and the selling pressure increases
Analysts at Skew believe that ETH prices need to rebound to $1,900 and stay above that level to defuse the selling pressure.
“ETH Spot Buckets and Delta CVD Orders: Scattered selling from market makers over the past day has been very noticeable, with dense liquidity. Unsurprisingly, Coinbase is the leading ETH seller for the “ETH Foundation.” If ETH can hold at $1,900, then Considering the severity of this sell-off, there is some relative strength. Note that Binance spot is not sold yet.”
Source: Skew
Experts see $1,933 as an important level for ETH, but the altcoin needs to show strength to kickstart its recovery.
erratic price movement
The increased selling pressure had a major impact on the ETH price, which plummeted from $1,900 to $1,850 within hours of the surge in selling activity. Therefore, the price is currently consolidating around the 50-day moving average, creating uncertainty and speculation for investors.
Source: TradingView
Recent actions by Vitalik Buterin and the Ethereum Foundation have raised questions about the future of the cryptocurrency and the impact of such a massive sale on the market. Some analysts believe this may be a reaction to the recent strong rally of memecoins in the cryptocurrency market.
In this case, the panic of Ethereum whales highlights the vulnerability of the market to the actions of influential individuals and institutions. This is the fund’s first major sell-off without causing severe market volatility. The last time the fund sold its holdings, the sector entered a long-term bear market that it has not yet emerged from.
The price recently slipped to $1,800 due to increased supply on exchanges led by the Ethereum Foundation, whales, and many market makers. Whether ETH will recover from its recent decline remains to be seen.
- Bitcoin Whales on the Flee – Ethereum Foundation Boosts ETH Activity
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