Ethereum supporters are confident that prices will break through the $2,000 level. However, recent moves by its founder, Vitalik Buterin, and the Ethereum Foundation, the team that runs the smart trading platform, raise concerns, especially among coin holders and traders, about whether the coin has what it needs to overcome key resistance levels.
ETH transfer raises concerns among investors
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 around $400,000 at current valuation, to Kraken, a cryptocurrency exchange.
Shortly after, 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 #KrakenETH 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 worry that dumping such a large amount of ETH could put further pressure on prices.
It is worth noting that ETH is currently 13% below its April highs and falling.
Coin holders, including ETH holders, often send tokens from time to time. Even so, any transfer to a centralized exchange is interpreted as bearish. Vitalik Buterin may need funds to cover operating costs or even invest in projects. At this time, it is not known why it sells.
In the past, Buterin sold ETH in lots without causing a significant price drop.
#PeckShieldAlert vitalik.eth has transferred 200 $ETH to Kraken in the last 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 could soon rally past $2,000.
According to data from Santiment, a leading on-chain data company, there has been a significant increase in the amount of Ethereum moving to crypto exchanges in recent months.
😮 #etherealActive deposits just hit an 8 month high. As we investigate the most likely cause, we can currently say that this will likely herald the next surge. $ETH volatility, similar to the result of spikes during the #bind & #FTX collapse. https://t.co/aBeHQudM52 pic.twitter.com/oHeypfUPvJ
— Santimento (@santimentfeed) May 5, 2023
Ethereum Sees Increased Adoption
Despite these concerns, there are also positive signs, based on on-chain activity.
A record amount of ETH was burned late this week, thanks to the meme coin craze, and specifically, PEPE. Most meme coins run on Ethereum and are actively moving with higher gas fees, providing a great opportunity to burn ETH and decrease circulating supply.
31.7K $ETH It has been burned in the last seven days.
To put that in perspective, since the merger (231 days ago), a total of 152K ETH 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
—KALEO (@CryptoKaleo) May 5, 2023
Additionally, Ethereum is experiencing increased adoption by major businesses and institutions, which is driving demand for the cryptocurrency.
Last week, the European Investment Bank (EIB) announced that it had issued its first digital bond on the Ethereum blockchain, marking a major milestone for the cryptocurrency.
Increased adoption and burning of ETH due to the meme coin mania could keep prices above key support levels for days to come. Still, it remains to be seen how prices will react in the coming days.
The sharp drop on May 6, reversing the gains on May 5, could anchor the next leg lower, forcing further sell-offs towards the $1,500 support line.
-Canva featured image, TradingView chart
