The Chinese government has reportedly seized a total of 7,000 Ethereum coins worth $16.7 million from the Ponzi scheme PlusToken. This has put some pressure on the Ethereum price, sending it below the $2,400 level, losing another 2% in the past few hours.
Chinese government to sell 542,000 ETH?
The latest developments have fueled speculation that the Chinese government will eventually sell the remaining 542,000 ETH (worth more than $1.3 billion) seized from the PlusToken scam. This could cause the price of Ethereum to drop below $2,000.
OXT Research analyst ErgoBTC reports that Chinese wallets associated with the scam have been moving funds recently since 2021 after being silent for nearly three years. PlusToken is a multi-billion dollar Chinese cryptocurrency scam that defrauded 2.6 million users in 2018 and 2019. At the time, local Chinese police confiscated $14 billion worth of BTC, ETH, and other altcoins.
Bitcoin (BTC) holdings dropped significantly between 2019 and March 2020, totaling about $1.3 billion. At the time, Bitcoin’s market cap was just $160 billion, so this drop was pretty significant.
However, Ethereum assets remained quiet until the summer of 2021, when the wallet moved a third of the 840,000 ETH to the unpopular cryptocurrency exchange Bidesk and later sold it. ErgoBTC analysts reported that the remaining ETH remained idle in multiple "mixed" addresses until early August 2024, when 542,000 ETH worth approximately $1.3 billion was consolidated into 294 new addresses. The analyst further added:
“Given recent efforts to re-obfuscate ETH, it is unlikely that the active allocation of 15.7k ETH moved yesterday was the last of the 540k ETH supply allocations.”
Ethereum Price Facing Selling Pressure?
In early July this year, as the German government sold Bitcoin, BTC prices faced significant selling pressure. Although the amount of selling was much smaller than the market value of BTC, it still significantly suppressed market sentiment.
If the Chinese government sells 542,000 ETH, Ethereum prices will face strong selling pressure below $2,000. Currently, ETH prices have fallen 2% to below $2,400.
Earlier this week, cryptocurrency analyst Ali Martinez said that ETH’s trading pattern is very close to symmetry. Therefore, any drop below $2,300 could further lead to a sharp drop to the $1,800 level.
Additionally, Ethereum whales have continued to sell off over the past week, which has dampened investor sentiment.
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