Massive Sale of ETH by the Ethereum Foundation: The Story and Its Impact

On the early morning of August 24, the Ethereum Foundation transferred 35,000 ETH to a certain exchange, attracting market attention. This operation occurred after the Federal Reserve released expectations for interest rate cuts and the cryptocurrency market began to show an upward trend.

Looking back in history, the Ethereum Foundation transferred 15,000 ETH to the same exchange on May 6, 2022. At that time, the price of ETH dropped from $2,006 to $1,740 over the next 6 days, a decrease of 13%.

The Ethereum Foundation has been jokingly referred to as "the master of escaping the peak" in the market, which stems from its record of selling large amounts of ETH at relatively high points in the past. For example, on May 17, 2021, the foundation sold 35,053 ETH at an average price of $3,533, after which the market experienced a severe decline. On November 11 of the same year, the foundation sold 20,000 ETH at an average price of $4,677, after which the market began to decline continuously.

However, from a longer-term perspective, the foundation's operations do not always accurately grasp the market peaks. Data shows that the foundation's two large sell-offs in December 2020 and March 2021 occurred before substantial rises in ETH, missing out on the subsequent significant increases.

Analyzing the transfer records of the foundation over the past year, it can be observed that its operating model is closer to periodic selling rather than precise "top escaping".

Regarding the recent transfer of 35,000 ETH, the executive director of the foundation explained that this is part of the fund management activities. The foundation budgets approximately 100 million dollars each year, mainly for grants and salary expenses. Some recipients only accept fiat currency, so it is necessary to convert a portion of ETH into cash.

Currently, the foundation still holds approximately 273,000 ETH, accounting for 0.25% of the total supply. According to the latest report, the foundation allocated 30 million USD in the fourth quarter of 2023 and 8.9 million USD in the third quarter, mainly for global conferences, online courses, and innovative projects.

Compared to the sale by the foundation, since the listing of the Ethereum ETF on July 23, a certain investment company's ETH products have seen a cumulative net outflow of 799,000 ETH, with an average daily net outflow of 32,000 ETH. This makes the foundation's recent sale of 35,000 ETH not particularly significant in scale.

The foundation's sale of ETH can be understood, as the team requires financial support for development and operations. Considering that the ETH held by the foundation accounts for only 0.25% of the total supply, its sale has a relatively limited direct impact on market liquidity. However, this behavior may have a negative effect on market sentiment, such as leading to a decline in holder confidence or triggering a follow-the-leader sell-off.

To improve this situation, the foundation could consider disclosing financial information more frequently and in greater detail. For example, regularly publishing reports containing detailed information about team expenditures, ETH sale plans, how funds are being used, and the size of the team. At the same time, providing the community with more channels for information about the foundation's activities and financial operations. Doing so can stabilize community sentiment and enhance ETH holders' understanding and support for the foundation.

In the future, we look forward to the Ethereum Foundation attracting more developers and users for this renowned smart contract blockchain through continuous research and development, public relations, community operations, and market education, promoting further development of the Ethereum ecosystem.