The potential sale of $1.3 billion worth of Ethereum (ETH) linked to the notorious Plus Token scam have stirred up anxiety within the cryptocurrency community. As investors closely monitor these events, a pressing question arises: how might this massive sell-off impact the price of Cardano (ADA), one of the leading alternatives to Ethereum?

Understanding the Plus Token Scam

The Plus Token scam stands out as one of the most significant frauds in the cryptocurrency space, drawing in numerous investors with promises of high returns. When the scheme was dismantled in 2020, it had managed to acquire an astounding 830,000 ETH, valued at nearly $1.984 billion at the time. Most of this Ether remained untouched until recently, creating suspense about the fate of these funds.

In August 2023, movement began on-chain with some of the remaining ETH, indicating a potential intention to sell. In just the last 24 hours, around 7,000 ETH—equivalent to approximately $13 million—has been transferred to exchanges such as Binance and OKX. This activity raises significant concerns, as it suggests those managing these assets may be gearing up for a large-scale sale that could disrupt the entire cryptocurrency market.

The Ripple Effect on Cardano

For Cardano, the implications of a potential ETH sell-off are considerable. Cardano is often dubbed an “Ethereum killer” due to its competing smart contract capabilities and growing ecosystem. However, ADA’s price history has shown a strong correlation with Ethereum’s price movements. This means that when Ethereum experiences significant fluctuations, other cryptocurrencies, including Cardano, tend to follow suit.

Currently, Cardano boasts a correlation coefficient of approximately 0.8 with Ethereum. This number indicates a strong relationship; if Ethereum’s price declines, Cardano is likely to see a similar downturn. As of now, ADA is trading around $0.3395, having slipped 1.9% over the past day.

What Could Happen if China Moves Forward?

Analysts are on alert regarding the possible repercussions if China decides to sell the seized Plus Token ETH. Historical data reveals that when the Ethereum Foundation previously sold a mere $30 million in ETH, the price dropped by about 4.8% on the same day. Extrapolating that to a potential sale of $1.3 billion worth of ETH suggests a possible drop of approximately 16.8%, which could push Ethereum’s price down to a new yearly low of around $1,953.

Given the strong correlation between ADA and ETH, a 16.8% decline in Ethereum could result in Cardano experiencing a significant decrease of about 30.24%, bringing its price down to roughly $0.23. Such a plunge would be a severe blow to ADA holders, who are already navigating a challenging market landscape.

The Alternative Scenario: No Sale

Conversely, if the anticipated sell-off does not occur, the crypto market could respond positively. The absence of a sale might be perceived as a sign of stability, encouraging investors to regain confidence in the market. In such a scenario, Cardano’s price could rebound, potentially rising towards the upper trend line near $0.45, representing an increase of approximately 23.56%.

Investor Sentiment Matters

It’s essential to remember that market psychology plays a crucial role in cryptocurrency price movements. If investors remain optimistic about the market’s stability, even in the absence of a sell-off, ADA might see increased buying pressure. Factors like community support, ongoing development, and broader market trends will also influence Cardano’s trajectory.

Moreover, if the Ethereum sell-off does not materialize, it could contribute to a more favorable market sentiment across the entire cryptocurrency sector. In a market driven by fear and uncertainty, even small signals of strength can significantly impact price movements.

Conclusion: A Critical Juncture for Cardano

The ongoing situation regarding the Plus Token Ethereum sale presents a complex dilemma for Cardano investors. With the potential for significant price fluctuations, many are left weighing their options. If China follows through with the sell-off, the resulting decline in Ethereum’s price could have cascading effects, leading to a substantial drop in ADA.

However, the crypto market is unpredictable. Should the anticipated sale not take place, there could be room for recovery, pushing Cardano higher as investors regain confidence.

At this pivotal moment, both seasoned and new investors must stay informed about developments surrounding the Plus Token ETH. Understanding how these factors will influence Cardano and the broader cryptocurrency market will be essential in navigating this turbulent landscape.