Ethereum price declines below $2,400 amid government selloff.
Chinese authorities may sell an additional 542,000 ETH from PlusToken.
Analysts warn of potential drops to $1,800 if selling pressure continues.
The price of Ethereum has taken a hit, currently trading below $2,400, following the Chinese government's decision to sell 7,000 ETH seized from the PlusToken scam. This move has raised concerns among investors, as the potential sale of an additional 542,000 ETH, valued at approximately $1.3 billion, looms over the market.
After nearly three years of inactivity, wallets connected to the PlusToken scam have begun to move funds. Reports indicate that these wallets have consolidated significant amounts of Ethereum.
The PlusToken scheme, which defrauded around 2.6 million users between 2018 and 2019, led to the confiscation of billions in cryptocurrencies by Chinese authorities. Historically, the Chinese government has shown a willingness to sell seized crypto assets, which has now rekindled fears of a significant market selloff.
Recent activity from these dormant wallets, now moving 7,000 ETH worth $16.7 million, has already placed downward pressure on Ethereum's price. As the market reacts to this development, analysts at OXT Research have pointed out that the movement of these funds may not be the last from the remaining 540,000 ETH.
The historical context of similar actions underscores the seriousness of the current situation. Earlier this year, the German government's selloff of Bitcoin resulted in notable price declines despite the comparatively smaller size of the assets involved.
The sentiment in the market remains fragile as Ethereum continues to face selling pressure, particularly as more whales appear to be offloading their holdings. Recent trends indicate that many long-term holders are also beginning to sell, further contributing to the prevailing negative sentiment.
Analysts closely monitor the Ethereum price, as it trades within a crucial range. Any sustained drop below $2,300 could trigger further declines, with some experts predicting a fall to around $1,800.
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Investors remain on alert as they navigate this uncertain landscape, with the recent developments amplifying concerns about Ethereum's stability soon.
