- With $353 million worth of Ethereum set to be unlocked, there is a heightened risk of increased selling pressure.
- Despite the large withdrawal, analysts suggest that Ethereum’s market cap is substantial enough to absorb the impact without causing a significant crash in price.
- An additional $877 million worth of Ether is awaiting withdrawal from validators.
Ethereum is just hours away from experiencing potentially massive market movements as over $350 million in Ether (ETH) is locked and ready to be released in the next nine hours. While traders and investors prepare for the consequences, there is a question of how this massive withdrawal will affect the price of the second-largest crypto in the world.
Upcoming Withdrawal and Potential Impact
Data from Token Unlocks shows that 145,380 Ether, valued at approximately $353 million, will become available for withdrawal at 20:00 UTC. Releasing such a large amount of Ether does not necessarily mean an immediate market sell-off, but it does increase the possibility of more selling pressure, especially considering the current market conditions.
The potential for a sell-off has raised concerns about whether ETH can sustain its important support level of $2,200. If it drops below this key level, it could lead to more panic selling, worsening the recent decline in Ethereum’s price.
Market Context, Recent Trends, and Selling Pressure
Ethereum’s price has been decreasing for the past three weeks. The cryptocurrency recently hit a five-month low below $2,200, which is part of a larger trend in the cryptocurrency market. The market has lost $510 billion in value.
Despite this decline, analysts at Bitfinex say that a market crash is unlikely. They point out that significant withdrawals have become more common following the Ethereum Merge and Shanghai upgrades. Although a $353 million withdrawal is substantial, they believe it’s unlikely to cause a 10% drop in ETH’s value. They argue that given Ethereum’s market capitalization of $300 billion and its daily trading volume of $24 billion, the impact should be minimal.
To the above market stress, Ethereum validators are allegedly preparing to convert their tokens and staking rewards to cash, raising demand-side pressure. At the moment, another 360k Ether which is approximately $877 million, is ready to be withdrawn by more than 10,000 validators.
The build-up of such sell orders could further exacerbate the bearish pressure, especially if integral market makers such as Jump Trading and Paradigm VC keep selling off. Analyzing the current reports, it may be stated that Ether has been sold by these firms, and as a result, it reduced its price from $3’000 to below $2’200.
Bottom Line
With Ethereum still in an unknown state, some critics think that the coin is close to hitting its local low, at the current. According to technical analysis of the current and previous cycles in Ethereum, it is believed that the price of ETH ought to level out thus giving a buying point.
Now that Ethereum has hit this significant milestone, the focus is squarely on how the market will respond to the withdrawal. The consequences could affect ETH’s price trends over the next several weeks, as traders and investors track key support and resistance levels.
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