Ethereum supporters are confident that prices will break the $2,000 level. However, recent moves by its founder, Vitalik Buterin, and the Ethereum Foundation, the team managing the smart contracting platform, raises concerns, especially from coin holders and traders, on whether the coin has what it needs to break above key resistance levels.
On May 5, a tracker, LookOnChain, noticed that Vitalik.eth, the domain associated with Ethereum co-founder Vitalik Buterin, transferred 200 ETH, which is worth about $400,000 at current valuation, to Kraken, a cryptocurrency exchange.
Shortly after that, the Ethereum Foundation also made a much larger transfer, moving 15,000 ETH, worth about $30 million, to the same platform.
After vitalik.eth transferred 200 $ETH($396K) to #Kraken, ETH Foundation also transferred 15,000 $ETH($29.7M) to #Kraken.https://t.co/FPVeH3Z8sJhttps://t.co/AHALnpKtxd pic.twitter.com/iLIHghJUIX
— Lookonchain (@lookonchain) May 6, 2023
This has raised concerns among holders, who are worried that the dumping of such a large amount of ETH could further pressure prices.
It’s worth noting that ETH is currently down 13% from its April highs, and sliding.
Coin holders, including those of ETH, typically send tokens from time to time. Even so, any transfer to a centralized exchange is interpreted as bearish. Vitalik Buterin might need funds to cover operating costs or even invest in projects. At this time, it is not known why he sells.
In the past, Buterin has sold ETH in batches without causing a significant price drop.
#PeckShieldAlert vitalik.eth has transferred 200 $ETH to Kraken within the last 1 hourhttps://t.co/1kkcQ1ZAbO pic.twitter.com/9T4VC0fSmX
— PeckShieldAlert (@PeckShieldAlert) March 13, 2023
Despite this development, some analysts, including Santiment, believe that ETH may be decoupling from Bitcoin, and that it might soon recover, breaking above $2,000.
According to data from Santiment, a leading on-chain data company, there has been a significant increase in the amount of Ethereum being moved to crypto exchanges over the past few months.
#Ethereum's active deposits just hit an 8-month high. As we research the most likely cause, we can currently state that this likely will foreshadow upcoming increased $ETH volatility, similar to the result of spikes during the #merge & #FTX collapse. https://t.co/aBeHQudM52 pic.twitter.com/oHeypfUPvJ
— Santiment (@santimentfeed) May 5, 2023
Despite these concerns, there are also positive signs, based on on-chain activity.
A record amount of ETH was burned at the end of this week, thanks to the meme coin craze, and specifically, PEPE. The majority of meme coins run on Ethereum and are being actively moved with higher gas fees, providing a great opportunity to burn ETH and decrease the circulating supply.
31.7K $ETH has been burned in the past seven days.
To put that in perspective, since the merge (231 days ago), 152K ETH total has been burned.
That’s ~21% of the total burn in ~3% of the total days.
This is the power of meme coins. pic.twitter.com/iFsZaDH5LU
— K A L E O (@CryptoKaleo) May 5, 2023
In addition, Ethereum is seeing increased adoption from major companies and institutions, which is driving up demand for the cryptocurrency.
Last week, the European Investment Bank (EIB) announced that it had issued its first-ever digital bond on the Ethereum blockchain, marking a significant milestone for the cryptocurrency.
The increased adoption and burning of ETH due to the meme coin mania could sustain prices above key support levels in the days ahead. Still, it remains to be seen how prices will react in the days ahead.
The sharp drop on May 6, reversing gains of May 5, could anchor the next leg down, forcing even more liquidations towards the $1,500 support line.
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