Chinese Government to Sell 542,000 ETH?

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.

The Chinese government has reportedly moved a total of 7,000 Ethereum coins. This has already put some pressure on the Ethereum price sending it under $2,400 levels with another 2% in the past few hours.

The latest development has sparked speculations that the Chinese government would be ultimately putting up for sale 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 observed 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, were sold off by the Chinese government in small batches. At the time, Bitcoin’s market cap was only $160 billion, and thus this selloff was quite substantial.

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, were consolidated into 294 new addresses, reported the ErgoBTC analyst.

“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,” the analyst added.

Earlier this year in July, following the Bitcoin selloff by the German government, the BTC price faced significant selling pressure. Despite the selloff value being much smaller compared to the overall BTC market cap, the event notably dampened the market sentiment.

If the Chinese government pulls off such selloff with 542,000 ETH, the Ethereum price can face strong selling pressure below $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 below $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.

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