On May 6, the Ethereum Foundation transferred nearly $30 million of ether to exchanges, and the market seemed to be feeling uneasy.

ETH prices are down 4.8% on the day at $1,900, but losses so far are negligible amid a broader recovery trend.

ETH price holds key support

After testing support at $1,850 near its 50-day exponential moving average (50-day EMA; red wave) a day earlier, the price of Ethereum made a modest recovery to $1,920 on May 7.

Furthermore, according to the shrinking Bollinger Band width in the chart below, price volatility on exchanges has declined during the aforementioned period. This further indicates traders’ calmness in the Ethereum Foundation transfer.

Notably, the 50-day MA has limited Ether’s downside attempts so far in 2023, barring a sell-off in early March that caused the price to briefly break below the red wave. Meanwhile, testing it as support has prompted ETH prices to break above $2,000.

Due to this support, ETH bulls may try to push the price above $2,000 again.

Conversely, if the 50-day moving average falls, traders may eye the confluence of support formed by the multi-month rising trendline and the 200-day moving average (blue wave) near $1,700 as the next downside target, which represents a decline of approximately 13% from current price levels.

Even with a deeper drop, ETH would still maintain its overall recovery trend when measured from its June 2022 bottom of $880.

Ethereum Exchange Reserves vs. Kraken Reserves

Rising exchange balances indicate rising potential selling pressure, and vice versa. In the case of Ethereum, despite the Ethereum Foundation’s $30 million transfer to Kraken, balances across all exchanges remain low.

For example, on May 6, Kraken’s ether balance increased to 1.84 million, up from 1.83 million a day earlier.

Despite this, the balance across all exchanges actually fell from 18.22 million ETH to 18.15 million ETH on the day, suggesting that any potential selling pressure from the Ethereum Foundation could be easily absorbed.

Not necessarily an ETH market top

The Ethereum Foundation's last major transfer was 20,000 ETH in November 2021, when the price peaked at around $4,850 and has since fallen 80%. Similarly, the foundation sold 35,053 ETH in May 2021 at a local market peak of around $3,500.

Many analysts see these fractals as another sign of a possible market top forming around $2,000, arguing that prices could fall in the coming sessions.

But broader data suggests otherwise. For example, the Ethereum Foundation’s large ETH sales also occurred during the 2020-2021 bull cycle, driven by growing demand for risky assets in a lower interest rate macro environment.

In other words, there is little evidence that the Ethereum Foundation’s sales have had any impact on Ethereum’s price trend. Instead, the cryptocurrency market is currently looking for clues from the US banking crisis and whether this will force the Federal Reserve to stop raising and lowering interest rates.