According to on-chain data analysis by Glassnode, Ether’s crypto balance from major exchanges dropped from 20.45 million to 20.38 million in the month of May. Despite a 5% increase in ETH price to $1950, the recent major ETH exchange transfer by a hedge fund and falling trends in the ETH/USD chart might hint at an incoming major sell-off in the investor market.
Since the crypto crash, the market continues to experience a bearish pattern across all cryptocurrencies. Ethereum’s native coin, ETH, has also been tanking for the past few weeks. As one of the most trusted and in-demand cryptocurrencies, ETH has tried maintaining its status in the market but the recent events are causing restlessness among long-term investors and traders.
Recently, FTX crypto exchange reported a big transfer of 32,000 ETH, around $60M was made by an Ether address within one hour on May 30. This ether address is suspected to be owned by a Singapore-based crypto hedge fund called Three Arrows Capital.
The suspicion arose as the hedge fund had previously transferred 26,700 ETH to the FTX exchange in May. This means the company has transferred a total of 58.7k ETH, around $1B to its exchange wallet.
Seeing a major investor like Three Arrows sending its ETH assets to the exchange wallet has convinced many traders that the fund is readying for a major sell-off or will dump the ETH stash all at once.
Whenever an investor transfers their crypto funds to exchange wallets to buy another digital asset in exchange for the cryptocurrency, it means a sell-off is coming. This is especially alarming if a major company like Three Arrows Capital does it.
The company hasn’t said much about this major transfer, but Ether’s chart analysis gives away the answer.
ETH is on the verge of a breakout
The sudden Three Arrows’ transfer to the exchange might be due to the recent Ethereum trends in the market that show a critical support line at $1,920, which is close to a sell-out indication.
During the whole month of May, Ethereum hasn’t shown any improvements. Based on the previous week’s report, the ETH chart showed a neutral market, which means it was neither bearish nor bullish.
Now, the chart shows that ETH’s relative strength index is close to its “overbought” threshold of 70. This means that Ether might face a breakout due to a sell-off.
When comparing ETH/USD, the support line as shown in the chart below indicates that ETH might drop even lower from $1920 to a new support level of $1850, causing fear among investors.
However, few market analysts are still hopeful about the ETH chart rise. According to a market analyst with the pseudonym of “Wolf,” if ETH manages to rise above the resistance level of $1920, then it could lead to a long-term upside. He explained this by sharing a setup chart below:
According to this chart, if ETH’s support level sits at an accumulation range of $1850 with a resistance level at $4,000, then the coin might rally towards $4,000, especially after Ethereum drops the Merge, which is a blockchain upgrade from proof-of-work to a proof-of-stake model.
The blockchain has been working on Ethereum 2.0 for a long time. In April 2022, Ethereum introduced the first mainnet shadow fork for ETH 2.0 for testing. The official launch will surely improve ETH’s position in the crypto market, which is expected to be “by Q2 or possibly slipping into Q3,” says Ethereum co-founder Joe Lubin.
Like Bitcoin, Ether hasn’t shown much improvement in the crypto market since the crash. Although the coin did show a relief rally on May 30 by 5% to $1930, still it failed to gain trust. Many investors warned traders that this rise might be short-term.
Wolf hopes that the mainnet launch might improve ETH/USD prices in the coming months. However, since the support level is still vague, nothing can be said as of now.