Do Ethereum Bulls Have Bigger Challenges to Face Ahead?

Ethereum is the second-largest cryptocurrency in the world, with Bitcoin being its only rival in the digital finance environment. Together, their market caps make up a whopping 70% of the entire global crypto marketplace, and the two are renowned as being the safest and most reliable cyber coins, a significant achievement in an environment that is infamous for its fluctuations and changes. Most investors know that the best way to protect their businesses against losses is to come up with a comprehensive strategy that gives them in-depth insights into how price crypto currency changes so that they can continue making profitable choices that ensure their portfolios are safe and the amount of funds they own continues growing, or at least remains stable.

However, the current marketplace remains uncertain, and many factors need to be taken into account when devising such a game plan. Doing your research and having a good idea of the latest marketplace movements can help tremendously and ensure you have a positive experience while trading.

Sales

Vitalik Buterin, one of Ethereum’s co-founders, was recently discovered to have sold $10M worth of Ethereum, or 1,100 coins, a transaction that coincided with the Ethereum Foundation sales, which were worth more than $200 million. The transfer took place in August and led to speculation about Buterin selling his assets in an attempt to create more profits, considering that despite the losses and price stagnation, Ethereum is 180% higher than it was two years ago. Recent data also shows that Ethereum addresses have been dealing with sizable outflows of around 422,000 Ether coins, worth approximately $1.04 billion as of September 1st.

Since 2022, more than 840,000 ETH have moved out of the addresses. All of these factors weighed in quite a lot for investors, causing them to wonder if there’s something deeper going on with the market. Regarding the allegations regarding his sales, though, Vitalik Buterin denies that this is the case, and on August 31st, he clarified that he never sold his holdings for profit. He added that ever since 2018, all the Ether transactions he has completed have been done in order to offer support for various projects, either within the Ethereum ecosystem itself or as part of charity work.

Ethereum Foundation

The Ethereum Foundation is a non-profit organization whose purpose is to support Ethereum and other related tech developments. It doesn’t control Ethereum and isn’t the only enterprise creating and fostering Ethereum-related developments. However, it has earned a reputation as a pivotal entity in the cryptocurrency sector by combining development with sustainability. Its mission is to ensure the long-term success of the Ethereum blockchain and that funds reach the most critical projects first and foremost.

The Ethereum Foundation has also become an advocate for Ether and the blockchain outside of the crypto space, aiming to bring cryptocurrencies further into the mainstream, demystify their intricacies, and clear any misunderstandings associated with the buying, selling, or trading of cryptocurrencies. The Ethereum Foundation is also responsible for selling different portions of its Ethereum holdings as a means of funding development and research initiatives that can help the ecosystem thrive.

The effects

The Ethereum marketplace is entirely decentralized and, as a result, dependent on other factors for price action and changes. One of them is the engagement rates users show within the marketplace. But the transfers that occur on the blockchain are crucial as well, and can have a significant impact on fluctuations. This is precisely why whale investors are watched so closely by the entire trading community, because their actions affect the price point for everyone.

Large transfers of Ether coins have the ability to cause significant market reactions, as investors interpret them as a sign of incoming selling pressure. One noteworthy example occurred in November 2021, when the Ethereum Foundation was responsible for selling 20,000 ETH, roughly $95 million. This transaction took place right before ETH reached a new peak, and there was an immediate 85% correction in the aftermath. The sale was seen as a direct contributor to the market decline, even though that was not the Foundation’s aim at all.

A few months earlier, in May 2021, the Foundation sold a whopping 350,000 coins, an action that preceded a steep plunge of 50% across marketplaces.

Another drop

While crypto markets are indeed unpredictable, and it can be challenging to keep track of all the movements, predictions are the lifeblood of the trading community. Investors use these estimations in order to get a rough idea of what they can expect from the market in the near future, as certain patterns tend to repeat themselves over time, and it becomes relatively easy to spot them after you’ve been involved in the trading environment for a while.

Historical data also plays an essential role in the Ethereum marketplace, and many investors have eyed previous patterns due to the recent sale. Ethereum Foundation transactions have preceded several major market corrections, including some positive ones. In December 2020, for instance, the sale of 100,000 Ethereum arrived before a supersized 630% price rally. Some additional factors that contributed to this growth were the switch to a proof-of-stake protocol from the standard proof-of-work model, the launch of the Beacon chain, and the macroeconomic factors, namely the actions of the Federal Reserve, that led to a boost in demand for riskier assets.

As a result, some investors have begun to wonder if the price of Ethereum could be significantly affected in the near future as well. Right now, the Fed plans to cut interest rates again, and outflows from ETFs have slowed down. From a technical standpoint, Ethereum has remained in the trading range of its 50-week and 200-week EMAs.

To sum up, Ethereum has not been performing as strongly as investors expected at the beginning of 2024, but it has nonetheless been considerably more robust than in previous years. The 200-week exponential moving average coincides with the lower trendline of the ascending triangle pattern resulting from the market movements of several years. This indicates that the possibility of a rebound is very likely but will most likely happen by the end of the current year or during the first quarter of the following year.