The Chinese government has reportedly moved a total of 7,000 Ethereum coins worth $16.7 million seized from the multi-billion dollar Ponzi scheme PlusToken. This has already put some pressure on the Ethereum price sending it under $2,400 levels with another 2% in the past few hours.
Chinese Government to Sell 542,000 ETH?
The latest development has sparked speculations that the Chinese government would be ultimately selling the rest of the 542,000 ETH, worth over $1.3 billion, seized from the PlusToken Scam. This could send the Ethereum price spiraling downwards under $2,000.
Analyst at OXT Research ErgoBTC reported that the Chinese wallets linked to the scam have been moving funds in recent times after staying dormant for nearly three years since 2021. PlusToken was a Chinese multi-billion dollar crypto scam that defrauded a massive 2.6 million users back in 2018 and 2019. Back then, the local Chinese police had confiscated $14 billion worth of BTC, ETH, and other altcoins.
Between 2019 and March 2020, a significant portion of Bitcoin (BTC) holdings, totaling approximately $1.3 billion. Back then, Bitcoin’s market cap was only $160 billion, and thus this elloff was sizeable.
However, the Ethereum’s holdings remained untouched until the summer of 2021, when the wallets transferred a third of 840,000 ETH to unpopular crypto exchange Bidesk, and sold them later. The remaining ETH stayed dormant across multiple ‘mixing’ addresses until early August 2024, when 542,000 ETH, valued at approximately $1.3 billion, was consolidated into 294 new addresses, reported the ErgoBTC analyst. The anlyst further added:
“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 Faces Selling Pressure?
Earlier this year in July, following the Bitcoin selloff by the German government, the BTC price faces significantly selling pressure. Despite the selloff value was much smaller to the over BTC market cap, the even significantly dampened the market sentiment.
If the Chinese government pulls off such selloff with 542,000 ETH, the Ethereum price can face strong selling pressure under $2,000. Currently the ETH price is already trading 2% down slipping under $2,400 levels.
Earlier this week crypto analyst Ali Martinez stated that ETH has been trading in a close symmetrical pattern. Thus, any drop under $2,300 could further lead to a major crash to $1,800 levels.
#Ethereum is trading inside a symmetrical triangle! A sustained close outside of the $2,300 – $2,600 range will determine the direction of $ETH trend. pic.twitter.com/8VBATLZugw
— Ali (@ali_charts) October 8, 2024
Furthermore, the Ethereum whale selling has continued over the past week from dormant holders that dampens the investor sentiment.
Bhushan Akolkar
Bhushan is a FinTech enthusiast with a keen understanding of financial markets. His interest in economics and finance has led him to focus on emerging Blockchain technology and cryptocurrency markets. He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Source: https://coingape.com/ethereum-price-drops-as-chinese-govt-sells-7000-eth-seized-from-plustoken-scam/
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