Ethereum’s native token Ether rose more than 5% to hit an intraday high of $1,930 (May 30). Despite this, the ETH/USD pair is at risk of another sell-off due to concerns over a large ETH inflow into an Exchange.
58.7K Ether was transferred to FTX May
According to on-chain data, the Ether address allegedly linked with Three Arrow Capital, a Singapore-based crypto-hedge fund, sent 32,000 ETH worth $60 Million to the FTX crypto-exchange in less than an hour.
It follows a 26,700 ETH deposit by the fund to the same exchange in May. This bulk transfer raised suspicions about the possibility that the Ether stash would be emptied. This is because crypto can only be transferred to exchange wallets by investors when they are looking to sell it.
dump eeth? https://t.co/7xdI80P8rZ
— Tim Copeland (@Timccopeland), May 30, 2022
According to Glassnode, however, Ether holdings by exchanges continued to decline in May.
All crypto exchanges saw a drop in ETH balances, dropping from 20.45 to 20.38 millions month-to-date (MTD), indicating that investors are preserving their investments for the long-term.
Ethereum balance on exchanges. Source: Glassnode
The rebound in ETH is weakening
Three Arrow’s massive Ether transfer to FTX coincides with ETH testing a critical support-turned-resistance level near $1,920 for a breakout, as shown below.
Four-hour chart of the USD/ETH exchange rate. Source: TradingView
Ether’s relative stability index is also nearing its “overbought threshold” of 70. This, according to technical analysis, tends precede a selloff. ETH could consolidate at $1,920 over the next few days, before returning to its rising trendline support of $1,850.
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A decisive move above $1,920 could be accompanied with an increase in trading volumes. This would trigger a long-term upside setup that is shared by Wolf, a pseudonymous analyst on the market, as shown below.
Weekly price chart for ETH/USD. Source: Wolf/TradingView
The setup shows the support levels at $1,820 in an accumulation range. On the other side, $4,000 serves as resistance. Wolf said that the price could rise to $4,000 in a few months after the Merge, a long-awaited upgrade that will make Ethereum a proof of-stake protocol.
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