The price of Ethereum (COIN: $ETH) could take a huge tumble soon after it was revealed that Chinese authorities had transferred over $16 million worth of the cryptocurrency to public exchanges. The details of the transfer were first revealed on X.
China Moves 7000 ETH To Public Exchanges
According to an X post by FreeSamourai, Chinese authorities moved 7000 ETH to public exchanges. As of Friday, October 11, 2024, those coins are worth around $16.89 million, based on the current price of Ethereum (ETH) of $2412.45 per coin.
The 7000 coins are part of a haul of 542,000 ETH coins recovered from the PlusToken scam by Chinese authorities. At the time it was shut down, the PlusToken scam held 194K BTC worth around $2 billion and 830K ETH worth around $215 million.
The wallets holding the funds were reactivated for the first time since 2021, and coins were moved to major exchanges such as Binance, OKX, and Bitget. When Chinese authorities first offloaded some of the coins in 2021, it temporarily caused crypto prices to fall.
The PlusToken Ponzi Scheme
PlusToken was dismantled by Chinese authorities in mid-2019 after they arrested the masterminds of the scam. In December 2020, the ringleaders were sentenced to eleven years in prison. Authorities seized $4 billion worth of coins in November 2020 linked to the scam. The seized assets included Ethereum, Bitcoin, Dogecoin, and XRP.
According to court documents, the seized digital asserts were given to Beijing Zhifan Technology Co. who were charged with the liquidation of the assets for restitution. PlusToken would give investors high rewards for referrals, while using funds from earlier investors to compensate new investors.
Could The News Impact Ethereum Price?
Earlier this year, German authorities sold off Bitcoin, which caused major downward pressure on its price. Despite the relatively small haul, it still impacted the price significantly.
If Chinese authorities liquidate their 542,000 ETH, it could have a major impact on the price. Some analysts have speculated that the price could fall below the $2000 mark. According to analysts, if the price of ETH falls below $2250, it could lead to a 53% decline to below $2,000.
After a slight dip following the news, the price of Ethereum has recovered and is now up 0.70% to $2,412.45 per coin. Over the past month, it has gained 3.29%, and year to date, it is up 5.93%. Meanwhile, Ethereum has gained 54.30% in the past 12 months.
Impact On Wider Market
Besides Ethereum, the Chinese authorities hold a significant amount of Bitcoin (BTC). If they begin selling off the BTC, it could have a wider impact on the market, resulting in a general decline in the crypto market.
Beyond impacting retail investors, the sales could have a wider impact on institutional investor confidence. Heightened volatility could reduce the appeal of crypto-based products in the medium term. However, if China fails to offload the coins, it could lead to a stronger market in the long haul.
Is Now a Good Time To Add Ethereum (ETH) To Your Portfolio?
While Chinese authorities have moved thousands of Ethereum coins to public exchanges, they have not started selling them yet. If they opt to sell them off gradually, it might not have a major impact on the market. However, if they offload them all at once, it could temporarily bring down prices. In the medium term, Ethereum’s price could potentially recover due to the upcoming interest rate reduction by the US Fed.
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