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Intro
Is it true that the market crashes when the Ethereum Foundation sells?
A lot of crypto traders believe so, and it makes sense - the Ethereum Foundation is the 18th largest holder of ETH after all.
But is there any truth to this rumor?
Let’s investigate
Background
All Transactions
Since 2020 the Ethereum Foundation has sold 7 times, selling a total of ~234 000 ETH for a value of ~$460m USD ($115m per year)
Date | ETH Amount | USD Value | Transaction Link |
17th of Dec 2020 | 100 000 ETH | $66.6m | |
12th of Mar 2021 | 28 000 ETH | $50.4m | |
17th of May 2021 | 35 053 ETH | $121.9m | |
5th of Aug 2021 | 864 ETH | $2.3m | |
11th of Nov 2021 | 20 000 ETH | $94.8m | |
6th of May 2023 | 15 000 ETH | $30.0m | |
23rd of Aug 2024 | 35 000 ETH | $93.8m | |
TOTAL: | 233 917 ETH | $459.8m USD | ㅤ |
Ethereum Foundation sells at the pico top
Visualizing the data
Below we can see how price moved 7-days before and after the ETH Foundation transferred ETH to Kraken.
Overall we can see a trend the prices decreased after 7-days as price went below the white horizontal line. This tells us price decreased compared to where it was when the ETH Foundation started selling.
Prices went down or stagnated every time after the Ethereum Foundation sold. The one time prices went up (purple line) was when they only transferred 864 ETH. So the reason prices did not dump that time may be because the ETH Foundation sold significantly less ETH than they normally do
Removing the Noise
While we can see that ETH seems to go down most of the time after the Ethereum Foundation starts selling we still don’t have a very clear visual example.
To fix this we can take the performance of price before and after each event and take an average at every point in time. With this we see how price performed on average before and after the event.
Doing this we end up with the chart below:
We weigh the performance of each event based on how much was sold. So if $100m was sold we focus 10x more on that than if say $10m was sold
(Idea being if the Ethereum Foundation sells more, then it should have more of an impact on the market and hence we should pay more attention)
Moment of Truth: Does the market dump when the Ethereum Foundation sells?
ETH was in an uptrend every single time before the Ethereum Foundation transferred out money, except the sell on the 17th of May 2021 (Green line in the photo).
In order to investigate how the market reacts to the Ethereum Foundation selling when prices are already trending up we’ll remove the green line scenario. This way we can see if the Ethereum Foundation actually causes tops to occur.
When we remove the green line we end up with this chart:
From what we can see it appears that even if the market is in an uptrend the Ethereum Foundation has the ability to stop that uptrend dead in it’s tracks with its selling pressure.
(Alternatively: The Ethereum Foundation is just a lot better at timing the market than everyone else, I’ll let you decide what you want to believe)
Conclusion
If you see the Ethereum Foundation transferring ETH to their Kraken account you may want to hold off on opening a long. Unfortunately, no amount of technical analysis will be able to stop the ETH Foundation from unloading millions worth of ETH on the market.
But it’s important to note that the effect seems to be most prominent when the Ethereum Foundation sells large amounts (Over 10 000 ETH).
Also, since the Ethereum Foundation hasn’t sold that many times over the years we don’t really have many examples to analyze. So it could just be a coincidence that the market on average started crashing after the Ethereum Foundation sold ETH.
Extra data:
For my fellow nerds, here’s some additional analysis and data:
Day of Week
For some reason the Ethereum Foundation prefers to sell late in the week, but not on Sundays which makes sense because Sunday is the rest day for God (Vitalik).
Hour of the Day
There doesn’t seem to be any consistency in terms of when during the day that the Ethereum Foundation decides to sell their ETH. The only conclusion we can draw is that it seems that the people working there have a somewhat normal sleep-cycle since we can’t see any transfers between 3am and 8am in the morning which honestly makes me a bit bearish on ETH (Just saying, I’ve never heard of any cracked developer in crypto that has a normal circadian rythm).
Price 7-days before and after every transfer:
Mandatory Warnings:
Don’t use this as financial advice. This entire write-up is an analysis into the Ethereum Foundation’s activities and how the market reacts to it. If you decide to risk your money because of what someone you don’t know on the internet wrote - then that’s on you.
This data set only includes 6 events, and in the picture without outliers we only had 5 events included. This is a very small sample size which means even though we might see a clear pattern here this may mean that none of this will be true for future events.