Ethereum Foundation Sell-Offs Ramp Up as ETH ETF Struggles

• Ethereum Foundation offloads 1,000 ETH to a multi-signature crypto wallet.
• Concerns arise as crypto aficionados ask Vitalik Buterin for an explanation.
• Ether ETF volumes tumble as Ethereum’s Spot market liquidity slims by 20%.

Amidst the ongoing crypto market pullback, the Ethereum Foundation has offloaded 1,000 Ether (ETH) tokens to a multi-signature crypto address. Cumulatively worth $2.38 million at stamped transaction time, the transfer set off a concerning precedent among crypto investors.

Ethereum Sell-Offs Pile Up: More to Come?

According to findings by blockchain intelligence platform LookOnChain, the Ethereum Foundation’s previous transaction resulted in swapping the deposited Ethereum (ETH) for DAI, a popular stablecoin running on Ethereum’s PoS chain.

If the trend continues, the Ethereum swap for DAI stablecoin could be considered a sell-off. Last week, LookOnChain also reported that the Ethereum Foundation has sold 239K tokens, worth approximately $654M.

Based on previous sales since the beginning of 2021, the Ethereum Foundation unloads its Ether onto exchanges nearly at the top. This has raised suspicion among the crypto crowd on X, as Ethereum holders speculate if the transfer is an annual practice or if more sell-offs are due in the coming months.

Did The Ethereum ETF Hype Fade Away?

Despite the inclusion in traditional finance, fresh-off-the-boat Ethereum exchange-traded funds (ETFs) remain overshadowed by Bitcoin ETFs. Even though both Bitcoin and Ethereum-based ETF products are currently seeing consecutive days of negative flows, a concerning trend is seen in the sluggish trading volume.

As noted by crypto analyst Kapoor Kshitiz on X, the declining rate of Ethereum ETF volumes can cause the issuers of these ETF products to reconsider and even close the product down. As if that wasn’t enough, the lackluster trading of Ether ETFs has slimmed Ethereum’s market liquidity by a staggering 20% since the ETH ETF debut .

The combined order book liquidity alludes to the market’s ability to absorb large volumes of trades at once without impacting Ethereum’s price on Spot markets. In contrast, Bitcoin (BTC) received a substantial market liquidity boost when the BTC Spot ETFs debuted on January 11, 2024, with the largest ETF issuer, Grayscale, closing the day with $2.3B in trading volume.

As the fading hype surrounding the Ethereum ETF takes its toll on the markets, crypto analysts see room for a bigger price drop. The crypto fear and greed index is drowning in fear at 22, and the negative sentiment could spark a market-wide retail sell-off before Ethereum hits the cycle bottom.

If Ethereum Foundation’s latest Ether sell-off is believed to be a sign of a local top, the second largest digital asset could further drop below the $2,300 price range. As of press time, Ether is exchanging hands at $2,327.30 with a 2% drop in 24 hours, according to CoinGecko .

On the Flipside

• Despite a record-low Ethereum ETF volume, the regular Spot market saw a 451% increase in trading volume on Friday.
• Derivatives markets have also enjoyed renewed interest in Ethereum, as the daily volume grew by 22% to $27.65B.

Why This Matters

Ethereum is the largest Proof of Stake (PoS) asset in the crypto sphere. Due to its better scalability and more variable adoption pursuit, it is expected to gain as much traction as Bitcoin in traditional financial markets.

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