PlusToken just transferred 790,000 Ethereum, jeopardizing ETH’s fundamental strength
Ethereum has been incurring intense fundamental strength in recent times. Much of this strength has come about as a result of the growing popularity of decentralized finance, which has ushered a significant number of new users into the ETH ecosystem.
It still remains unclear as to whether or not DeFi is a lasting sector within the crypto markets or if it will just become another passing trend, but its growth does bode well for Ethereum.
That being said, the benefits this has brought the cryptocurrency over the past week may soon be nullified if the cryptocurrency sees a massive selloff due to the notorious PlusToken scammers transferring nearly 800,000 Ethereum.
If these tokens are offloaded onto the spot markets, they could place immense pressure on the crypto that sends it reeling lower.
This could strike a deadly blow to a potentially over-inflated DeFi sector, causing Ethereum’s fundamental strength to degrade.
PlusToken scammers transfer $190 million worth of Ethereum, sparking fears of an imminent price decline
Earlier today, cryptocurrency movement tracker “Whale Alert” noted that 789,534 Ethereum had been transferred from a wallet owned by the Chinese PlusToken Ponzi scheme to another unknown wallet.
“789,534 #ETH (187,847,558 USD) transferred from PlusToken to unknown wallet.”
The PlusToken scam captivated the attention of the crypto sphere throughout 2019. Some have speculated that the founders of the scheme were actually responsible for much of the downwards volatility seen by the market last year.
As reported by CryptoSlate in December of last year, data from analytics firm Chainalysis showed that PlusToken’s crypto holdings that were collected from unsuspecting victims could total well within the billion-dollar range.
Although the wallets associated with this now-defunct scam have largely been dormant in recent times, it is possible that today’s Ethereum transfer will mark the start of another bout of them cashing out their crypto holdings.
Potential ETH dump jeopardizes its fundamental strength
If PlusToken does begin selling even a portion of this Ethereum on the open market, it could spark a massive selloff that drives its price significantly lower.
This could jeopardize the growing fundamental strength it has been incurring as a result of its recent influx of new users.
The popular “yield farming” trend that has been driving the Ethereum-based DeFi ecosystem’s growth does entail some liquidation risk if the underlying assets being used declines in value.
As such, a sharp ETH selloff could cause widespread DeFi liquidations, halting the sector’s massive growth and striking a blow to the cryptocurrency’s fundamental strength.