Ethereum, the second-largest Cryptocurrency in market capitalization, recently saw its value decrease by 24% in one month. This steep drop has been associated with four large transactions carried out by four large whales who traded $599 million worth of ETH across several exchanges. This event has brought back issues with a few large holders of Bitcoin and how they affect the market.
Four Entities Responsible for the ETH Transfers
There are four entities involved in the large ETH transfers: the Ethereum Foundation, Jump Trading, an ICO-associated whale, and the Diamond Whale. These players transferred a total of 197,800 ETH to centralized exchanges, and this caused a significant decline in the price.
Ethereum Foundation and Price Prediction
The Ethereum Foundation recently executed a transaction of 35,000 Ethereum to Kraken just before shares plunged by 9%. Blockchain analysis of Jump Trading also revealed that the company transferred 88,917 ETH to several exchanges, just when the market was experiencing a sharp drop on August 5. However, both entities still possess large quantities of ETH and are continuing to fuel the fluctuations in the market.
According to CoinCodex utilizing artificial intelligence and machine learning, Ethereum traded at $3,813 on 1st June, marking an increase of nearly 2% from the current market rate. It establishes a foundation for Ethereum to aim at new highs after the recent green light given by the U. S. Securities and Exchange Commission (SEC) on ETH exchange-traded funds (ETFs). If Ethereum maintains a position above $3,827 and breaks through $4,095, it may look to set a new record. However, it is a word of caution as the market makers may fabricate conditions akin to what was seen with Bitcoin following the approval of the BTC ETFs.
Implications of ETF Approval for Ethereum
ETFs allow traditional investors to invest in Ethereum without actually buying Ethereum directly. These investors can acquire ETF shares via brokers like they would in the case of equities. ETFs generally are listed on a specific stock exchange to make the shares readily marketable. With higher liquidity levels, the means of price execution will also become smooth and prices will have variations. ETF approval stands for regulatory recognition which, in turn, brings institutional involvement.
Such investors tend to invest a lot of cash, which could lead to increased Ethereum demand. This means that the positive sentiment around ETFs can help increase the price of Ethereum. Whereas positive news or favorable market conditions may spur increased borrowing, negative news or unfavorable market conditions may have the opposite effect. ETFs are beneficial in enhancing the general maturity of cryptocurrency markets and making them closer to conventional financial markets.
Conclusion
The recent Ethereum price decline demonstrates the weaknesses of the crypto space where a few market makers determine the overall fluctuations. Ethereum faces these challenges, the market reaction to whales will be followed closely by the investors and analysts.
