Ethereum Foundation Continues ETH Sales

Ethereum Foundation has sold 1,700 ETH amidst growing concerns of inflation within the network and recent declines in activity.

Inflationary Network, Ethereum Foundation Continues ETH Sales

On the afternoon of October 9, 2023, on-chain data indicated that the Ethereum Foundation's labeled wallet address executed a swap of 1,700 Ethereum (ETH) via the DEX Uniswap, receiving 2.76 million USD Coin (USDC).

On-chain information from Arkham Intelligence further reveals that this wallet address holds 240.68 ETH, 3.2 million USDC, 49,700 DAI, and 10,000 ARB, totaling assets worth 3.687 million USD.

The actions of the Ethereum Foundation would be unremarkable if the Ethereum blockchain were seeing positive developments. However, they come at a "sensitive" time when the Ethereum network appears to be experiencing a "deflationary reversal," marked by a significant decline in NFT and DeFi transactions. In just the past 30 days, global ETH supply has increased by nearly 30,000 ETH, equivalent to about 47.9 million USD.

The purpose of these transactions by the management organization is currently unclear, but historical trading patterns of this wallet suggest that Ethereum Foundation's actions regarding ETH have consistently had a "negative" impact, leading to substantial declines in the coin's value shortly afterward.

For instance, in May 2023, Ethereum Foundation transferred a total of 15,000 ETH (worth 30 million USD at the time) to the Kraken exchange. In March 2021, 28,000 ETH were also moved to Kraken, coinciding with a price drop within a week. Similarly, in May of the same year, the transfer of 35,000 ETH to exchanges resulted in an immediate price decrease.

The most recent significant sell-off was in November 2021, where ETH prices dropped from a peak of 4,800 USD to around 4,300 USD after Ethereum Foundation transferred 20,000 ETH to Kraken. It appears that Ethereum developers have been adept at "timing" the market, often choosing the peak of ETH bull runs to execute their sales.

Ethereum co-founder Vitalik Buterin also executed the latest ETH sale on October 7 by transferring 1,000 ETH (1.64 million USD) to the Bitstamp exchange. Buterin has been consistently involved in ETH sales throughout August and September, as previously reported by Coin68.

Another notable development potentially affecting ETH prices is from Justin Sun, a member of the board of directors at Huobi Global (now HTX). Sun unstaked 3,951 ETH from the liquid-staking protocol Lido Finance (LDO), followed by sending 20,000 ETH (equivalent to 36.2 million USD) to the Binance exchange, though his subsequent motivations remain unclear.

Following these developments, ETH prices dropped more than 2% to 1,586 USD, falling below the 1,600-1,700 USD range observed over the previous 24 hours.

1-hour chart of ETH/USDT pair on Binance as of 5:00 PM on October 9, 2023