Ethereum Foundation has recently moved nearly $30 million worth of ETH to a cryptocurrency exchange, sparking concerns of a potential selloff in the market. Jumping ahead, we must note that the Foundation would never exercise activities that may lead to a sell-off. Yet, some so-called analysts decided to spread the FUD still. According to Gate.io cryptocurrency exchange, the price of ETH dipped 4.8% to $1,900 that day, but the decrease has been minimal as the broader recovery trend continues.
With this in mind, let’s investigate what has exactly happened and where ETH is heading. Spoiler alert, The number of validator nodes keeps rising which in Layman’s terms means that even more ETH will now be put in HODL mode. Furthermore, despite previous large sales by the Ethereum Foundation leading to bear markets, there is limited proof that such transactions influence the overall market direction.
ETH Price Maintains Crucial Support
On May 7, Ether’s price rebounded slightly to $1,920 after briefly testing its 50-day exponential moving average (50-day EMA; represented by the red wave) near $1,850 as a support level the previous day.
Moving averages are a popular and widely used technical analysis tool that helps investors and traders to identify trends and potential entry or exit points. The moving average smooths out price fluctuations and helps to reveal the underlying trend. There are various types of moving averages, such as the simple moving average (SMA), exponential moving average (EMA), and weighted moving average (WMA). Among these, the EMA is particularly favoured by traders, as it gives more weight to recent price data, making it more responsive to current market conditions. The use of multiple moving averages, such as the 50-day and 200-day EMAs, can provide additional insights, like identifying support and resistance levels, detecting trend reversals, and confirming the strength of ongoing trends.
Price fluctuations decreased on all major exchanges during this period, as demonstrated by the narrowing Bollinger Bands Width in the chart below. This further illustrates the market’s composure amidst the Ethereum Foundation’s transfer.
Interestingly, the 50-day EMA has consistently limited Ether’s downward movements in 2023, except for a brief selloff in early March when the price momentarily fell below the red wave. Meanwhile, testing the 50-day EMA as support has prompted ETH’s price to seek a breakout above $2,000.
As a result of this support, ETH bulls may attempt to push the price above $2,000 once more. On the other hand, a fall below the 50-day EMA could lead traders to target a confluence of support that includes a multi-month rising trendline and the 200-day EMA (the blue wave) near $1,700 as the next downside goal, approximately 13% below the current price levels.
According to all metrics, ETH can safely experience an even greater drop, and still retain its rising-to-the-stars trend vector.
Ethereum Exchange Reserves
In the case of Ethereum, the overall balance across all exchanges dropped to 18.15 million ETH from 18.22 million ETH, suggesting that any potential selling pressure from the Ethereum Foundation could be easily absorbed.
Crypto exchange reserves refer to the amount of a specific cryptocurrency held by various trading platforms. These reserves can serve as an important indicator of market sentiment and potential price movements. When exchange reserves increase, it suggests that investors are depositing their assets with the intention of selling, which could lead to increased selling pressure and a potential price decline. Conversely, when exchange reserves decrease, it may indicate that investors are withdrawing their assets, signaling increased confidence in the market and a potential price appreciation.
No Clear Indication of an ETH Market Top
The Ethereum Foundation’s last major transfer was 20,000 ETH in November 2021, coinciding with the price peaking around $4,850 and subsequently dropping 80%.
Some analysts interpreted these patterns as an indication of another potential market top formation near $2,000, speculating that the price may fall in upcoming sessions.
However, broader data implies otherwise. For instance, large ETH sales by the Ethereum Foundation also took place during the 2020-2021 bull run, driven by increased demand for risk-on assets in a low interest rate macro environment.
In summary, there is limited evidence to suggest that the Ethereum Foundation’s sales directly impact the price trend of Ethereum. Instead, the cryptocurrency market is currently reacting to the U.S. banking crisis and the potential impact on the Federal Reserve’s decisions regarding interest rate hikes and cuts.
Most ETH price prediction platforms such as Gate.io prediction tools outline that ETH is facing an astounding potential to rise much further, and market indicators fully support this model. Last but not least, Ethereum staking after the Shanghai update is now open to withdrawals, which seems to attract even more investors than ever before. Long live the ETH, by the looks of it!