Ethereum Foundation: Reasons and Impacts Behind the Large Sale of ETH

Recently, the cryptocurrency market has experienced a wave of upward momentum; however, an on-chain operation has attracted market attention. In the early hours of August 24, the Ethereum Foundation transferred 35,000 ETH to a certain exchange. This action has sparked discussions in the market regarding the foundation's financial management.

Looking back in history, the last large-scale transfer of ETH by the foundation was on May 6th of last year, when 15,000 ETH was transferred in. In the following 6 days, the price of ETH dropped from $2,006 to $1,740, a decline of 13%.

The foundation has been dubbed the "top escape master" for selling large amounts of ETH multiple times at relatively high points. 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 significant decline. On November 11 of the same year, the foundation sold 20,000 ETH at an average price of $4,677, and the market also began to decline.

However, in the long run, the foundation does not always accurately grasp the market peaks. Data shows that the foundation also sold ETH in December 2020 and March 2021, but missed the subsequent surge. The transfer records from the past year indicate that the foundation's operations resemble regular sales rather than fully relying on market timing.

Regarding the reason for this transfer of ETH, the Executive Director of the foundation explained that it is part of the funds management activities. The foundation budgets approximately 100 million USD each year, mainly for grants and salary expenses. Some beneficiaries only accept fiat currency, so it is necessary to convert some ETH into cash.

It is worth noting that the foundation currently holds approximately 273,000 ETH, accounting for 0.25% of the total supply. According to the latest report, the foundation allocated $30 million in the fourth quarter of 2023 and $8.9 million in the third quarter, mainly for global conferences, online courses, and innovation projects.

In terms of market impact, the 35,000 ETH sold by the foundation is relatively small. In contrast, since the Ethereum ETF was launched on July 23, the overall net outflow from the market has been about 141,900 ETH. The proportion of ETH held by the foundation is small, and its selling behavior has limited direct impact on market liquidity, but it may affect investor sentiment.

To enhance community confidence, the foundation may consider disclosing financial information more transparently, including regularly publishing detailed financial reports that outline team expenditures, ETH sales plans, and how funds are used. Additionally, providing the community with more channels of information regarding the foundation's activities and financial operations will help stabilize market sentiment and improve the community's understanding and support of the foundation.

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