Ethereum Faces Potential Supply Shock as Chinese Authorities Eye $1.3B ETH Sale
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is facing a potential supply shock as Chinese authorities
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is facing a potential supply shock as Chinese authorities prepare to potentially sell over $1.3 billion worth of seized ETH. This development comes amid broader market uncertainty, with the crypto Fear and Greed Index plunging to a seven-day low of 39, indicating a state of fear among traders.
Ethereum Price Under Pressure
As of October 11, 2024, Ethereum was trading at $2,401, down nearly 2% in the past 24 hours. The price drop coincides with bearish sentiment across the cryptocurrency market. However, Ethereum holders have more to be concerned about due to the looming threat of a massive ETH sell-off by Chinese authorities.
Unexpected Supply Overhang
Onchain researcher ErgoBTC reported that 7,000 ETH was recently moved to exchanges, part of the 542,000 ETH seized from the PlusToken crypto Ponzi scheme in 2018. This movement has triggered a surge in Ethereum exchange reserves to a three-week high, according to data from CryptoQuant.
In the last 24 hours, the total number of ETH held on exchanges increased by more than 110,000 tokens, reaching its highest level in three weeks. This influx suggests that many traders are moving their coins to exchanges with the intent to sell, potentially increasing selling pressure on ETH.
ETH/USD Technical Analysis: Key Support and Resistance Levels
The $2,300 Support Level
Analysts are closely watching the $2,300 support level, which could prove critical for Ethereum’s short-term price action. If ETH price touches this level, it could trigger a strong rebound. Historically, Ethereum has shown resilience at key support levels, often leading to significant price recoveries.
Experts from West Island Blog suggest that holding above $2,300 could lead to a quick rise toward $3,000, with a potential rally to $6,000 in the coming months. This support level could serve as a springboard for a new bullish trend if the market sentiment improves.
Resistance at $2,420 and Beyond
On the upside, Ethereum is facing resistance near the $2,420 level. A bearish trend line is forming with resistance at this price point on the hourly chart of ETH/USD. Breaking above this level could open the path to further gains, with the next hurdle sitting near the $2,450 resistance zone.
If Ethereum manages to break above $2,420, it might target the $2,500 resistance zone in the near term. The subsequent resistance levels to watch are $2,550 and $2,560.
Ethereum Market Outlook: Volatility and Opportunities
While the potential sale of $1.3 billion worth of ETH by Chinese authorities poses a short-term risk, some analysts view this as a potential buying opportunity. The increased exchange inflows and large transaction volumes suggest heightened whale activity, which could lead to increased price volatility in the coming days.
Investors and traders should closely monitor key support and resistance levels, as well as on-chain metrics, to navigate the potential turbulence in the Ethereum market. Despite the current bearish pressure, the long-term outlook for Ethereum remains positive, with many experts eyeing a significant rally once the current market uncertainties subside.
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