Massive amounts of Ethereum hit exchanges with a potential sell-off to follow
Hedge fund Three Arrows Capital has moved US$60 million of ETH into FTX cryptocurrency exchange in possible preparation for a sell-off.
- Experts claim that the altcoin's technicals are quite weak at the moment, suggesting that a near-term price target of AUD$2,100 (US$1,500) may be on the horizon.
- ETH is set to undergo a major testnet merge, allowing the asset to make its long-awaited transition to a proof-of-stake (PoS) consensus mechanism.
- Ethereum's total valuation stands at AUD$325 billion (US$233 billion) while its market share lies at around 18%.
Despite the market rallying over the last 48 hours, Ethereum continues to face a lot of volatility. The altcoin has stayed range-bound between AUD$2,500 and $2,800 since 30 May, currently trading at AUD$2,692.
On-chain data shows that ETH may face another round of sell-offs as major investors continue to move massive amounts of the altcoin onto exchanges. Such moves are usually witnessed when potential liquidations are on the cards. On 30 May, a wallet address allegedly owned by Singapore-based venture capital Three Arrows Capital sent 32,000 ETH (worth approximately US$60 million) to trading platform FTX over 4 hours.
The transfer comes after the fund offloaded another 26,700 ETH to the same exchange earlier last month, leading to speculation that the firm may be dumping its ETH holdings for good.
Three Arrows Capital is co-founded by Su Zhu, who drew attention last year for criticising Ethereum only to scoop up a substantial stack when the price later dipped. It's unclear whether this current move reflects a loss of long-term faith in the project or if it's simply an attempt to time the market before it takes another leg down.
Despite this, the volume of ETH held by centralised trading platforms has been declining. ETH balances across exchanges dipped from 20.45 million to 20.38 million in May.
The Merge inches closer
The lack of positive price action comes when Ethereum's Ropsten testnet merge is set to occur. The development will be ETH's first major step towards transitioning to a PoS consensus mechanism. ETH developer Tim Beiko revealed earlier this week that a new Beacon Chain for Ropsten has been launched, which will serve as a precursor to the final merge. The testnet transition will most likely happen on 8 June.
Ropsten is one of Ethereum's main testing grounds, providing devs with glimpses into what might go wrong once the ETH mainnet switches to a PoS set-up. The transition will make the platform more energy-efficient. However, it is not expected to reduce gas fees on the network, an issue that has plagued Ethereum for a long time.
While ETH touching AUD$2,800 (US$2,000) recently was viewed by many traders as a positive sign, experts believe the surge was just a relief rally. Analysts claim that the altcoin's technicals remain shaky with ETH potentially dropping down AUD$2,100 (US$1,500) in the near term.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.