The Ethereum market is under intense selling pressure as the Chinese government moves 7,000 ETH worth $16.7 million from wallets seized in the infamous Plus Token scam. This development has caused the Ethereum price to drop below $2,400, fears of a potential larger selloff that could drive prices even lower. Analysts are warning that ETH could drop below $2,000 if the selling continues, especially with the looming threat of an additional 542,000 ETH potentially hitting the market.
On October 10, 2024, news broke that the Chinese government had begun liquidating part of the 7,000 ETH seized from the Plus Token scam. The Plus Token scheme, one of the largest Ponzi operations in crypto history, defrauded 2.6 million users and amassed billions in assets including Bitcoin (BTC), Ethereum (ETH), and other altcoins.
While the Chinese authorities initially sold a portion of Bitcoin holdings between 2019 and 2020, the bulk of Ethereum holdings had remained untouched until recently. In August 2024, the government consolidated 542,000 ETH, worth $1.3 billion, into 294 new addresses, fears that these funds could soon be sold, creating significant downward pressure on Ethereum’s price.
The recent sale of 7,000 ETH is just a fraction of the government’s holdings, raising concerns that the remaining 542,000 ETH may also be liquidated in the near future. If this were to happen, Ethereum’s price could spiral below $2,000, according to analysts.
The latest move by Chinese wallets tied to the Plus Token scam comes after nearly three years of dormancy. According to OXT Research analyst Ergo BTC, these wallets have been gradually moving funds since early August 2024. Initially, the scammers transferred a third of their 840,000 ETH to an obscure exchange in 2021, with the remaining funds staying dormant until recently. Now, with these large quantities of Ethereum re-entering circulation, the market faces significant downward pressure.
Analysts point out that the 7,000 ETH sale, combined with the potential for a larger selloff of 542,000 ETH, could lead to a substantial decline in Ethereum’s price. If ETH breaks below the critical $2,300 support level, a drop to $1,800 could be on the horizon, particularly as traders react to the increased supply in the market.
As of now, Ethereum is trading near $2,400, down 2% over the past 24 hours. The recent selloff by the Chinese government, combined with bearish market sentiment, has put ETH under severe pressure. Crypto analyst Ali Martinez recently warned that Ethereum has been trading in a tight symmetrical pattern, and any drop below $2,300 could result in a significant decline, potentially pushing ETH down to $1,800.
In addition to the technical signals, market sentiment remains cautious as traders brace for the potential sale of the remaining 542,000 ETH from the Plus Token scam. The impact of such a large-scale selloff could have ripple effects across the broader cryptocurrency market, especially as Ethereum is the second-largest cryptocurrency by market cap.
The Plus Token scam, which first came to light in 2018, has continued to haunt the crypto markets. Back then, the Chinese authorities confiscated $14 billion worth of crypto assets, including Bitcoin, Ethereum, and altcoins. While the Bitcoin selloff by the Chinese government between 2019 and 2020 dampened market sentiment, the much larger Ethereum holdings had remained untouched until recently.
If the Chinese government moves forward with the sale of the remaining 542,000 ETH, the impact on Ethereum’s price could be significant. Despite Ethereum’s larger market cap, such a sale would increase the circulating supply of ETH substantially, leading to heightened selling pressure and a potential collapse of key support levels.
Ethereum’s price is facing an uncertain future as the Chinese government begins selling its ETH holdings from the Plus Token scam. With 7,000 ETH already moved, the market is now bracing for the potential liquidation of an additional 542,000 ETH worth $1.3 billion. If the selloff continues, Ethereum’s price could drop below $2,000, with further declines to $1,800 possible if support at $2,300 fails.
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