1700 ETH Sale by the Ethereum Foundation
What Happened to 1700 ETH?
The Ethereum Foundation sold 1700 ETH on Uniswap V3. The Ethereum Foundation has sold large amounts of ETH before. In the last three months, it has sold around 2000 ETH and another 1700 ETH. Currently, the Ethereum Foundation holds 316.8K ETH.
Here’s why the Ethereum Foundation sold ETH: As a non-profit organization, the Ethereum Foundation burns all of its transaction fees and does not generate revenue. While Ethereum’s on-chain revenue has been positive in recent months, it lost $10.96 million last month and $9.34 million this month. This is believed to be due to a decrease in activity on the Ethereum network.
Reasons for the Ethereum Foundation’s sale
In 2021, the Ethereum Foundation allocated $48 million for research, development, and developer support. The recent ETH sell-off appears to be for similar reasons. Funds were probably needed to pay wages and support developers.
Impact of the Ethereum Foundation’s sell-off
The Ethereum Foundation’s ETH sale did not have a significant impact on the market. However, the timing of the Ethereum Foundation’s sale was notable because it coincided with a short-term peak in the past.
The Ethereum Foundation’s sale of ETH caused the price of ETH to drop by more than 3%, and the selloff weighed on the ETH futures market. On Monday, the price of ETH dropped, causing crypto traders to lose up to $30 million or more.
Additionally, news of the Ethereum Foundation selling ETH worsened market sentiment.
Sandwich attack and other factors
While the Ethereum Foundation was selling 1700 ETH, it suffered a sandwich attack, resulting in a loss of $9101. This sandwich attack is a trading technique that involves sandwiching transactions in front of and behind certain transactions in a mempool to gain profit.
Causes of Ethereum weakness
Ethereum has been experiencing a streak of weakness lately, and as a result, trading volumes have been falling. So, what are the causes of this weakness?
First, there has been a shift of Ethereum funds to decentralized exchanges instead of centralized exchanges, which has led to a decrease in trading volume on CEX, which is thought to have made it harder for institutional investors to adopt Ethereum.
Secondly, the rise of Ethereum’s Layer 2 solutions such as Optimism, Arbitrum, opBNB, Base, and ZK sync has reduced the utility of Ethereum’s own chain. In addition, aggressive grant programs from competing Layer 1 blockchains may have had an impact. Dapp activation may also have suffered due to the increased activity of Sui, Aptos, Solana, Near, and others.
All of these reasons have contributed to the ongoing bearishness of Ethereum. Going forward, Ethereum will need to keep an eye on these trends and figure out how to respond.
Additionally, Crypto service provider Matrixport pointed to deteriorating fundamentals for Ethereum, which they attributed to the delayed news of the EIP-4844 update.
The recent weakness in the price of Ethereum is believed to be caused by negative news and market dynamics. These include increased issuance due to changes in monetary policy, a large sell-off by the Ethereum Foundation, and the disappointing performance of the recently launched Ethereum futures ETF.
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