On May 6, the Ethereum Foundation transferred nearly $30 million in Ether (ETH) to the Kraken cryptocurrency exchange, causing jitters in the market about a potential selloff event. ETH price fell 4.8% to $1,900 on the day, but the decline has been negligible thus far amid a broader recovery trend.
Ether’s price rebounded modestly to $1,920 on May 7, after testing its 50-day exponential moving average (50-day EMA; represented by the red wave) near $1,850 as support a day earlier. Moreover, price volatility on Kraken diminished during this period, as evidenced by the contracting Bollinger Bands Width.
The 50-day EMA has effectively capped Ether’s downside attempts thus far in 2023, excluding an early March selloff that saw the price briefly falling below the red wave. Meanwhile, testing the 50-day EMA as support has spurred the ETH price to pursue a breakout above $2,000.
In light of this support, ETH bulls may attempt to take the price above $2,000 once again. On the other hand, a drop below the 50-day EMA could have traders targeting a support confluence consisting of a multi-month ascending trendline, and the 200-day EMA (represented by the blue wave) near $1,700, a drop of approximately 13% from current price levels. Even with a more substantial decline, ETH would maintain its overall recovery trend from its June 2022 bottom of $880.
A rising exchange balance hints at an increase in potential selling pressure and vice versa. In Ethereum’s case, the balance stayed lower across all exchanges, even with the Ethereum Foundation’s $30 million transfer into Kraken. For instance, Kraken’s Ether balance increased to 1.84 million ETH on May 6 from 1.83 million a day prior. However, the balance across all exchanges dropped to 18.15 million ETH from 18.22 million ETH on the same day, indicating that any potential sell-pressure from the Ethereum Foundation can easily be absorbed.
The Ethereum Foundation’s last significant transfer was 20,000 ETH in November 2021, with the price then peaking around $4,850 before declining 80%. Similarly, the foundation sold 35,053 ETH at the local market top of around $3,500 in May 2021. Many analysts viewed these fractals as evidence of another possible market top formation near $2,000, arguing that the price may fall in the coming sessions.
In summary, while the Ethereum Foundation’s recent transfer sparked concerns about a potential selloff, the overall exchange balance has decreased, suggesting the market can absorb any selling pressure. Although some analysts question the difference between actions by the Ethereum Foundation and Ripple, the near-term price movements of ETH will primarily be dictated by broader market trends and support levels, rather than isolated events.
Source: Cointelegraph
