Approximately 94k ETH was transferred from an account in the Ethereum genesis block a couple of days ago, as seen on Etherscan. Speculation of the identity behind the transaction aside, a large amount of Ether moving from the genesis block coincides with some interesting trends developing in the cryptocurrency space over the last few days.
Market Effects & Project Pressure
Cryptocurrencies have been in an extended bear market since their all-time highs at the end of last year. Causes for the sustained price depression is most likely due to a variety of factors, all up for interpretation. Outside of a slight rebound in prices today, cryptocurrencies have been in a general freefall over the last few days across the market.
Moving 94k ETH from the genesis block is a significant event, especially considering that the same account has moved nearly 200k ETH to the same address over the course of the last 3 months. While there are numerous potential reasons for the correlation and movement of ETH, it is worth noting.
The decline in prices has undoubtedly left projects that raised funds through ICOs in a precarious position. For instance, ETH was valued at over $600 at the beginning of June and plummeted to below $300 yesterday. A 50% decline in value of ETH over roughly 2 months — which many ERC-20 projects still retain from their sales — places enormous pressure on projects to accelerate their timelines and get a product out the door. Nobody knows where the prices are going, and many projects may see this as a necessary opportunity to liquidate their assets into a more stable fiat currency so that they can have a more robust projection of their project runway, or risk losing more value.
Projects that raised $20 million through an ICO and have only liquidated a portion of it are at the whims of the market at this point. Price fluctuations, especially of the declining variety, are simply unsustainable for many projects, mainly because there is no precedence for a market like cryptocurrencies.
Long-term investors in cryptocurrencies are feeling the heat from the market too. A holder of ETH in the Ethereum genesis block clearly got in when the price was incredibly cheap. Liquidating assets at this point would ensure a substantial return on investment while also removing the incessant need to worry about price fluctuations that are inherent in the cryptocurrency markets.
Concerns will always be present for crypto moving from genesis blocks. While legitimate, this is not the first time crypto markets have seen widespread declines and won’t be the last either. It’s not likely that 94k ETH moved from the genesis block sparked the recent downturn, but it may have had an impact on its acceleration.
What it does reflect, is a growing trend for liquidity needs by both crowdfunded projects and investors with the current market uncertainty.