Online reports revealed that the Chinese Government has started to move thousands of Ether (ETH) seized from a $4 billion crypto Ponzi scheme. As a result, Ethereum investors have recently shared their concerns about the possibility of a massive sell-off.
Investor Fear Upcoming ETH Selling Spree
On Wednesday, an X user alerted that the Chinese Government recently moved the remaining seized Ether from the PlusToken Ponzi scheme for the first time in three years. The addresses holding these tokens have been dormant since 2021.
The first movement began in early August when various wallets linked to the seized crypto assets transferred 2,800 ETH, worth around $6.5 million, to a single wallet, which sparked concerns about a possible sell-off.
The wallets’ most recent on-chain moves seemingly indicate that the selling process has begun. On Tuesday, the addresses transferred around 15,700 ETH between several wallets in an alleged effort to obfuscate the tokens’ tracking.
Out of the 15,700 ETH, over 7,000 ETH, valued at around $16.7 million, were sent to several exchange deposit addresses and presumably sold yesterday.
Following the collapse of the PlusToken scheme, the Chinese government seized around $4.2 billion in crypto assets from the exchange, including 840,000 ETH, valued at $215 million at the time.
The assets remained mostly untouched until 2021 when a third of the seized ETH was sent to the now-closed crypto exchange Bidesk and allegedly sold. Following the presumed sale, the ETH sat in thousands of “mixing addresses” before being re-consolidated in a fresh set of 294 addresses this August.
According to the report, the Chinese government still holds around 542,000 ETH, worth over $1.3 billion. Additionally, the post noted the massive selling pressure seen during the government’s sell-off of the seized Bitcoin (BTC) in 2020, which would be “the equivalent sell pressure of around $10b today.”
“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 X post suggested, reigniting Ethereum investors’ worry about possible sell-off.
Ethereum Foundation Sells Again
The Chinese government transfers aren’t the only major actions alarming investors. On-chain data analysis firms revealed that the Ethereum Foundation recently joined the whales’ selling frenzy.
Per the reports, wallets linked to the Ethereum Foundation have moved around $3.21 million this week. One of the addresses sent 1,250 ETH to the crypto exchange Bitstamp on Tuesday, while another related wallet sold 100 ETH for 242,828 DAI on Wednesday.
Previously, Ethereum’s co-found Vitalik Buterin has clarified some of his on-chain activity as they have fueled a bearish sentiment among investors. In the last 24 hours, Ethereum has seen a 2% price drop, falling below the $2,400 support level.
Crypto analyst Ali Martinez weighed in on Ethereum’s performance. Martinez noted, “Each time Ethereum breaks above the TD setup resistance trendline, a strong bull follows. But when ETH breaks below the TD setup support trendline, we’ve seen an average 53% correction.”
Based on this, the analyst suggested that the next key support level to watch out for is $2,250, as losing it could trigger a substantial price drop. As of this writing, ETH is trading at $2,383.
Ethereum's performance in the three-day chart. Source: ETHUSDT on TradingView