China is preparing to sell about $1.3 billion worth of Ethereum (ETH) that it seized from the PlusToken Ponzi scheme. This is the first time that these tokens have moved since 2021. This event has sparked concerns that the crypto market, especially Ethereum, could face increased selling pressure soon.
A crypto researcher named FreeSamourai shared on X (formerly Twitter) that around 7,000 ETH of the total 542,000 ETH taken from the PlusToken scam were recently transferred to different trading platforms. This action suggests that authorities might be starting to sell these assets. If the sale happens, some experts believe that Ethereum’s price could fall below $2,400.
Right now, Ethereum is trading at $2,403.45, which is a significant drop of over 50% from its all-time high of $4,891 back in 2021. Trading volumes have also increased by 4.10%, reaching $14.7 billion, and the current market cap stands at $289 billion. Even though the massive sell-off has not yet occurred, there is already nervousness in the crypto community. This is because past events show that large sales of cryptocurrencies by governments or institutions often cause fear, uncertainty, and doubt (FUD) in the market. However, recent history has shown that the crypto market can sometimes handle this kind of negative pressure without collapsing.
One example of this happened in Germany. Earlier this year, the German government began selling off Bitcoin (BTC) it had confiscated. Fears of a massive price drop surfaced, but the market didn’t react as negatively as expected. There is now concern that the same kind of sell-off could take place with the Ethereum seized from the PlusToken scheme.
While Ethereum is the focus here, Bitcoin is also facing its own challenges. In the past week, over 63,000 BTC, valued at roughly $1.83 billion, was sent to various crypto exchanges. This type of activity is seen by many investors as a sign that selling pressure is building. According to data from CryptoQuant, on October 7, about 28,000 BTC was sent to exchanges. On October 8, another 23,500 BTC was transferred, and an additional 12,000 BTC was moved on October 9.
When large amounts of Bitcoin or Ethereum are transferred to exchanges, it usually means that investors are preparing to sell. These assets are typically held in cold storage for long-term security. When owners move their funds to exchange wallets, it indicates that they may be getting ready to liquidate their holdings.
Bitcoin had already started the week in a downward trend. The price opened at over $64,000 but fell to around $62,000 by the end of October 7. The next three days saw further price drops, with Bitcoin falling below its 200-day exponential moving average. This is a critical level of support that many traders and analysts closely watch. When an asset drops below this line, it often signals further losses ahead.
A combination of macroeconomic factors contributed to Bitcoin’s downward price movement. Higher-than-expected inflation data, along with an increase in jobless claims, weighed heavily on investor sentiment. As a result, Bitcoin recorded red candles for multiple consecutive days, which further weakened confidence in the market.
Some experts, like Glassnode analyst James Check, believe that for Bitcoin to attract new interest, it must break free of the $60,000 range. Only then can Bitcoin reach new highs and create momentum in the market. However, other analysts are less optimistic. They predict that Bitcoin will drop below $50,000 before any meaningful rebound occurs. Given that Bitcoin reached an all-time high of around $74,000 in March 2024 but has not managed to reach those levels again, there is skepticism about whether the price can recover anytime soon.
While Bitcoin struggles to regain strength, there are also fears in the market related to the Silk Road case. On October 7, the United States Supreme Court declined to hear a case involving Battle Born Investments and the U.S. government. The case was about 69,370 Bitcoin that had been seized during the Silk Road raid. With the court’s decision, the government is now clear to sell this Bitcoin, valued at over $4.38 billion.
Investors are worried that this potential sale could add even more downward pressure on Bitcoin’s price. However, data from Arkham Intelligence shows that the 69,370 Bitcoin in question has not moved yet. This has provided some relief to the market, but the looming threat of another large government sell-off still hangs over investors’ heads.
Despite the current market struggles, some analysts believe that the crypto market will eventually recover. The key question is how soon this recovery will happen and how much damage will be done before it begins. The large inflows of Bitcoin and Ethereum to exchanges suggest that some investors are bracing for a downturn, but others see this as an opportunity to buy digital assets at a lower price before the market bounces back.
At the same time, the crypto market is also dealing with the aftermath of a 50 basis-point interest rate cut by the U.S. Federal Reserve. This decision had a mixed impact on crypto markets. While some assets showed signs of recovery, others, like Bitcoin and Ethereum, continued to face selling pressure. The broader economic environment is still uncertain, and rising inflation remains a concern for both traditional and digital markets.
For Ethereum specifically, the upcoming sale of the $1.3 billion seized from the PlusToken scam is likely to create volatility in the market. Whether the market can absorb this selling pressure without a major price crash is yet to be seen. Investors will need to keep a close eye on both government actions and market data to gauge when the best time might be to enter or exit positions.
In the end, while Ethereum and Bitcoin are facing downward trends, the future is not entirely bleak. Markets have shown resilience in the face of selling pressure before, and there’s hope that the same will happen here. Whether it’s the PlusToken Ethereum sale, the potential Silk Road Bitcoin sale, or the broader macroeconomic conditions, these factors will all play a role in shaping the crypto market’s future in the coming months. Investors should stay informed and cautious, as the landscape can change quickly.
