On May 6, Ethereum Foundation transferred nearly $30 million in Ether (ETH) to the Kraken cryptocurrency exchange, causing jitters in the market about a potential selloff event. ETH price fell 4.8% to $1,900 on the day, but the decline has been negligible so far amid a wider recovery trend.ETH price holding key supportEther’s price recovered modestly to $1,920 on May 7 after testing its 50-day exponential moving average (50-day EMA; the red wave) near $1,850 as support a day ago.Moreover, the price volatility dropped on Kraken in the said period, per the contracting Bollinger Bands Width in the chart below. That further shows traders’ calm amid the Ethereum Foundation transfer.Notably, the 50-day EMA has capped Ether’s downside attempts so far in 2023, barring the early March selloff that saw the price briefly falling below the red wave. Meanwhile, testing it as support has prompted the ETH price to pursue a breakout above $2,000.As a result of this support, ETH bulls may attempt to take the price above $2,000 again. Conversely, a drop below the 50-day EMA could have traders eye a support confluence comprising a multi-month ascending trendline and the 200-day EMA (the blue wave) near $1,700 as the next downside target, down about 13% from current price levels. Even with a larger decline, ETH would be maintaining its overall recovery trend when measured from its June 2022 bottom of $880. Ethereum exchange reserves vs. Kraken reservesA rising exchange balance suggests potential selling pressure rising and vice versa. In Ethereum’s case, the balance remained lower across all the exchanges despite the Ethereum Foundation’s transferring $30 million in to Kraken.For instance, Kraken’s Ether balance increased to 1.84 million ETH on May 6 from 1.83 million a day ago.Ether Kraken balance vs. exchange balance. Source: GlassnodeNevertheless, the balance across all exchanges actually dropped to 18.15 million ETH from 18.22 million ETH on the day, indicating that any potential sell-pressure from the Ethereum Foundation can easily be absorbed. Not necessarily a ETH market topThe Ethereum Foundation’s last big transfer was 20,000 ETH in November 2021, when the price topped around $4,850, and declining 80% thereafter. Similarly, the foundation sold 35,053 ETH at the local market top of around $3,500 in May 2021.Related: Ethereum up 20% in April while Markets Pro sees 379% gain in one dayMany analysts treated these fractals as a sign of another possible market top formation near $2,000, arguing that the price may fall in the coming sessions.Ethereum Foundation sold another 20,000 Ethereum at the recent local top.Every time the eth foundation / Vitalik / Consensys dumps a massive presale bag it marks the top.What’s the difference between ripple dumping hundreds of millions on retail vs ETH founders doing it? https://t.co/pw8ukMiR8v— Brad Mills ⚡️ (@bradmillscan) January 28, 2022
But broader data suggests otherwise. For instance, Ethereum Foundation’s large ETH sales occurred also during the 2020-2021 bull cycle, boosted by growing demand for risk-on assets in a lower interest rate macro environment.Ethereum Foundation large ETH transfers to exchanges in recent period. Source: Wu BlockchainIn other words, there’s little evidence to suggest that the Ethereum Foundation’s sales have any impact on Ethereum’s price trend. Instead, the cryptocurrency market is currently taking cues from the U.S. banking crisis and whether this will force the Federal Reserve to stop hiking and cut interest rates.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.