Past significant sales of ETH by the Ethereum Foundation have often been followed by bearish market trends, yet there is scant proof that these transactions directly affect the overall market direction.

On the 6th of May, the Ethereum Foundation moved close to $30 million worth of Ether to the Kraken cryptocurrency exchange. This move led to market anxieties about a possible significant liquidation event.

On the day, the price of ETH dropped by 4.8% to $1,900. However, in the context of a broader market recovery trend, this decrease has so far been minimal.

ETH Price Maintains Crucial Support

Following a dip to its 50-day exponential moving average (50-day EMA) around $1,850 the previous day, Ether’s price bounced back modestly to $1,920 on May 7.

Moreover, during this period, the volatility on Kraken fell, as evidenced by the narrowing Bollinger Bands width in the chart. This demonstrates a certain level of tranquility among traders despite the Ethereum Foundation’s transfer.

The 50-day EMA has effectively limited Ether’s bearish attempts throughout 2023, aside from the early March sell-off that briefly pushed the price below this level. Subsequently, using it as a support level has encouraged ETH price to pursue an upward break past $2,000.

Given this support level, ETH proponents might aim to push the price beyond $2,000 once more.

On the flip side, a fall below the 50-day EMA could see traders eyeing a confluence of support levels, including a multi-month upward trendline and the 200-day EMA (depicted by the blue wave), around $1,700. This represents approximately a 13% decrease from the current price levels.

Despite such a significant drop, ETH would still uphold its overarching recovery trend when assessed from its June 2022 low of $880.

Comparing Ethereum Exchange Reserves vs. Kraken Reserves

An uptick in exchange balance often implies a rise in potential selling pressure, and the inverse is also true. Despite the Ethereum Foundation’s $30 million transfer to Kraken, Ethereum’s overall exchange balance remained lower.

For example, Kraken’s Ether balance went up to 1.84 million ETH on May 6, a slight increase from 1.83 million the previous day.

Yet, the total balance across all exchanges actually decreased from 18.22 million ETH to 18.15 million ETH, suggesting that the Ethereum Foundation’s potential sell-pressure could be easily offset.

Ethereum Foundation’s Transfer: A Market Top for ETH?

The Ethereum Foundation’s last substantial transfer was in November 2021, when it moved 20,000 ETH, and the price peaked around $4,850, subsequently declining by 80%. Similarly, in May 2021, the foundation sold 35,053 ETH when the market topped near $3,500.

These patterns led several analysts to speculate about another potential market top around $2,000, arguing that the price might decrease in the coming sessions.

However, broader data paints a different picture. Notably, the Ethereum Foundation also executed significant ETH sales during the 2020-2021 bull cycle, amidst increasing demand for high-risk assets in a low-interest-rate environment.

Consequently, there is limited evidence to argue that Ethereum Foundation’s sales impact Ethereum’s price trajectory. Rather, the cryptocurrency market appears to be responding to factors such as the U.S. banking crisis and the potential policy decisions of the Federal Reserve.