As of the latest update, Ethereum (ETH) was trading at $2,401, reflecting a nearly 2% decline in its price over the past 24 hours. This downward movement aligns with a prevailing bearish sentiment in the wider cryptocurrency market, mirrored by the Fear and Greed Index hitting a seven-day low of 39, indicating a prevailing sense of fear among traders.
However, Ethereum investors are now facing additional worries due to reports of a probable offloading of 542,000 ETH, which translates to a value exceeding $1.3 billion, by the Chinese authorities.
Surprising Surplus of Ethereum Supply
Insights from onchain analyst ErgoBTC have highlighted an unforeseen surplus of ETH supply following the movement of 7,000 ETH to various exchanges. This batch of tokens comprises a portion of the 542,000 ETH seized from the PlusToken cryptocurrency pyramid scheme back in 2018.
The PlusToken scheme had hoarded over 194,000 Bitcoin (BTC) and 830,000 ETH before its shutdown. While most of the Bitcoin reserves were likely liquidated between 2019 and 2020, a fraction of the ETH was sold off in 2021.
The remaining balance of 542,000 ETH was recently consolidated across multiple addresses in August 2024, and as per ErgoBTC, there are indications that some of these coins are now in motion.
On October 9, a significant amount of ETH, totaling 15,700, was withdrawn from these addresses, with nearly fifty percent of it being funneled into exchanges such as BitGet, Binance, and OKX.
It is noted that the transfer patterns bear resemblances to the previous Bitcoin sell-offs orchestrated by the authorities in 2020. This development has placed Ethereum in a delicate position, with the likelihood of increased selling pressure in the imminent weeks.
Reserves on Exchanges Notices a Three-Week High
The influx of these deposits has caused a spike in Ethereum reserves on exchanges, marking a three-week high as indicated by data from CryptoQuant.
Within the past 24 hours, there has been a surge of over 110,000 ETH moving onto exchanges, reaching the highest level witnessed in three weeks.
This uptick suggests a trend of traders shifting their holdings to exchanges with the intention to sell. Notably, a significant rise in reserves was noticed on derivative platforms, paving the way for a potential surge in Ethereum’s volatility.
Insights from IntoTheBlock also indicate a jump in large transaction volumes, hinting at heightened whale activity. Despite this, Ethereum’s market performance hasn’t shown significant gains, which hints that these large transactions could be primarily sell-side actions rather than buy-side activities.
Furthermore, data on liquidations highlights the bearish impact of the increased exchange deposits on Ethereum, with over $31 million worth of ETH liquidated in the past 24 hours, out of which $27 million accounted for long liquidations.