The Ethereum Foundation recently transferred nearly $30 million in Ether (ETH) to the Kraken cryptocurrency exchange, causing concerns among traders about a possible selloff event. This resulted in a 4.8% decline in the price of ETH to $1,900. However, this decrease has been insignificant so far, given the wider recovery trend in the market.
Despite the transfer, the price volatility dropped on Kraken within the said period, indicating that traders remain calm amid the Ethereum Foundation transfer. Moreover, Ether’s price has made a modest recovery to $1,920 on May 7 after testing its 50-day exponential moving average (50-day EMA) near $1,850 as support a day earlier. The 50-day EMA has prevented Ether’s downside attempts so far in 2023, except for the early March selloff that briefly saw the price fall below the red wave.
Testing the 50-day EMA as support has prompted the ETH price to pursue a breakout above $2,000. Therefore, ETH bulls may attempt to take the price above $2,000 once again. Conversely, a drop below the 50-day EMA may have traders eye a support confluence comprising a multi-month ascending trendline and the 200-day EMA (the blue wave) near $1,700 as the next downside target, down about 13% from current price levels.
Despite the transfer, Ethereum’s balance on all exchanges remained lower, indicating that any potential sell-pressure from the Ethereum Foundation can easily be absorbed. Ethereum’s balance on Kraken increased slightly to 1.84 million ETH on May 6 from 1.83 million ETH the previous day. Nevertheless, the balance across all exchanges dropped to 18.15 million ETH from 18.22 million ETH on the day.
Many analysts interpreted the Ethereum Foundation’s previous large ETH transfers as a sign of another possible market top formation near $2,000, suggesting that the price may fall in the coming sessions. However, broader data suggests otherwise. Ethereum Foundation’s large ETH sales also occurred during the 2020-2021 bull cycle, boosted by growing demand for risk-on assets in a lower interest rate macro environment.
In conclusion, there is little evidence to suggest that the Ethereum Foundation’s sales have any impact on Ethereum’s price trend. Instead, the cryptocurrency market is currently taking cues from the U.S. banking crisis and whether this will force the Federal Reserve to stop hiking and cut interest rates.
Leave a Reply