After a brief recovery on August 6, Ethereum (ETH) is once again under significant selling pressure. Despite showing some gains earlier on August 7, the cryptocurrency is experiencing a decline, as evident in its daily chart, which shows a rejection at the $3,500 resistance level. If selling intensifies, ETH could continue to plummet, potentially targeting the $2,000 support line.
Jump Trading’s Massive Ethereum Liquidation Raises Concerns
The current weakness in Ethereum’s price can be attributed to several factors, with notable pressure from Jump Trading, a prominent crypto market-making firm. Over the past few trading days, Jump Trading has been aggressively selling off ETH, further driving down its price. According to data from Lookonchain, the firm recently claimed 11,501 ETH, valued at over $29 million, from the liquidity staking platform Lido Finance, and this block of ETH is expected to be sold.
Additionally, Jump Trading, under investigation by the U.S. Commodity Futures Trading Commission (CFTC), plans to redeem another 19,049 ETH, worth over $48 million, from Lido Finance. This large-scale liquidation is anticipated to weigh heavily on the market, potentially lowering ETH prices.
On August 5, Jump Trading liquidated over 120,000 wrapped ETH (wETH), intensifying the sell-off. While Bitcoin lost over 20% that day, Ethereum’s losses were more severe. Its price plummeted by nearly 40% from July highs, reaching as low as $2,100.
Additional Market Pressures: PlusToken and Ronin Bridge Hack
Beyond Jump Trading’s activities, Ethereum also faces selling pressure from wallets associated with the infamous PlusToken Ponzi scheme. According to Scopescan data, large amounts of ETH are being moved from these wallets, which control roughly $2 billion worth of ETH. The last significant movement from these wallets occurred in 2021 when Chinese authorities shut down the scam. The recent transfers are raising concerns, similar to the panic seen when the U.S. government moved $2 billion in Bitcoin (BTC) and when Mt. Gox began distributing BTC to creditors. This activity is further dampening sentiment around ETH.
Adding to the challenges, Ethereum is under scrutiny following the Ronin Bridge security breach. Although a white-hat hacker returned roughly 2 million USDC out of the $10 million lost, the fact that ETH was the primary asset stolen raises additional concerns. This breach echoes the major hack in 2022, where the Ronin Bridge lost over $600 million, further contributing to the current market uncertainty.
