ETH or Ethereum prices dwindled on Wednesday after a dormant wallet moved ETH worth $2 billion. Possible market pressure was created after hundreds of wallets connected to the $4.2 billion PlusToken Ponzi scheme were seized and started transferring thousands of ether (ETH).
At the press time, Ethereum was trading at $2,438.02, down over 1.2%. On-chain data suggested that this wallet was linked to a $2 billion seizure in 2020, which was the source of the assets traced from dormant wallets to a single wallet, totaling about 2,800 ETH.
What are Ponzi schemes?
An investment scam known as a “Ponzi scheme” uses funds from later investors to compensate early investors to provide the impression of large gains. An investor in a Ponzi scheme is promised a high rate of return with low risk.
It depends on word-of-mouth since new investors learn about the substantial returns that early investors obtained. When fresh funding stops coming in, the plan will inevitably end because it can’t pay out the claimed gains.
Both a Ponzi scheme and a pyramid scheme employ new investors’ money to settle debts owed by previous backers. A pyramid scheme breaks down when the pool of possible members shrinks and often depends on compensating early participants to attract more participants.
Will ETH be further affected by the Ponzi scheme wallet?
On-chain data for Ethereum (ETH), the second-largest cryptocurrency by market value, indicate a possible growth in the future, though the token is currently down. A rise in active addresses, a capitulation, and a negative MVRV point to a potential price recovery for ETH in the days ahead.
The Active Addresses statistic indicates the importance and demand for the asset among traders. In the instance of Ethereum, Active Addresses increased by 15%, from 410,560 on Monday to 472,640 as of Wednesday.
The spike in active addresses following Monday’s cryptocurrency crash indicates that demand for Ether is increasing despite dampened sentiments.
Ethereum’s price aims for the elusive $3,000 mark in the future. Two Fair Value Gaps (FVGs)—between $2,556 and $2,630 and between $2,697 and $2,859—are where ETH will encounter resistance as it rises.
According to the Relative Strength Index (RSI) momentum indicator on the daily chart, Ether is presently oversold. This can cause the altcoin to receive a buy signal.
