Could Ethereum Drop to $2,400 Due to U.S. Government Moves? – In-Depth Analysis

• Why Is Ethereum Facing Selling Pressure from the U.S. Government?
• How Strong Is Ethereum’s Technical Support at $2,500?
• What’s Driving Ethereum’s Underperformance Against Bitcoin?
• FAQ: Ethereum Price Risks and Market Dynamics

Ethereum (ETH) started the week with a slight uptick, hovering above $2,500, but on-chain data reveals growing concerns about potential selling pressure. The U.S. government’s recent transfer of $219,000 worth of ETH to Coinbase—its first such move under the current administration—has sparked fears of a larger sell-off. While technical indicators remain balanced, a break below $2,500 could push ETH toward $2,400. Meanwhile, Ethereum’s underperformance against bitcoin has reignited interest in Bitcoin Layer 2 projects like Bitcoin Hyper ($HYPER). Here’s a deep dive into the factors at play.

Why Is Ethereum Facing Selling Pressure from the U.S. Government?

The U.S. Treasury’s transfer of $219,000 in ethereum to Coinbase this week, though small, marks its first ETH movement to an exchange since the Trump administration took office. Analysts interpret this as a potential precursor to larger sales, especially since the Treasury still holds ~$650M in ETH. Historical patterns show that such transfers often precede increased exchange inflows, which typically lead to price dips. For example:

• In 2023, a similar transfer by the German government preceded a 12% ETH drop.
• CoinGlass data shows ETH’s net exchange flows turned positive post-transfer, signaling bearish sentiment.
• The last U.S. ETH sale in 2022 correlated with a 22% monthly decline.
• Market volatility spikes after government-linked wallets become active (see Mt. Gox Bitcoin movements).
• BTCC analysts note that sustained selling could test ETH’s $2,400 support.

How Strong Is Ethereum’s Technical Support at $2,500?

ETH has traded between $2,400–$2,700 for over 60 days, showing resilience. Key technical factors:

• The 9-day EMA remains above the 21-day EMA—a bullish crossover.
• RSI at 54 suggests moderate buyer control (TradingView data).
• $2,500 is a psychological level; losing it may trigger stop-loss orders.
• Historical support at $2,400 held during May’s market downturn.
• Volume remains average—no panic selling yet.

What’s Driving Ethereum’s Underperformance Against Bitcoin?

The ETH/BTC pair has declined for two consecutive days, reflecting Bitcoin’s dominance amid its $107K rally. Contributing factors:

• Bitcoin’s institutional ETF inflows outpacing Ethereum’s.
• Growing hype around Bitcoin Layer 2s like Bitcoin Hyper ($HYPER).
• HYPER’s Solana Virtual Machine integration aims to make BTC programmable.
• Ethereum’s gas fees remain high compared to competitors.
• BTC’s "safe haven" narrative during geopolitical tensions.

FAQ: Ethereum Price Risks and Market Dynamics

Could the U.S. government’s ETH holdings crash the market?

Unlikely. The $650M stash represents just 0.3% of ETH’s circulating supply—far less than Mt. Gox’s pending Bitcoin distributions. However, coordinated sales could amplify short-term volatility.

What’s the worst-case scenario for ETH’s price?

If $2,400 breaks, the next major support is $2,200 (March 2025 low). A 15% drop WOULD align with May’s correction but remains above ETH’s 200-day moving average ($2,100).

Is Bitcoin Hyper a threat to Ethereum?

Not immediately. HYPER focuses on Bitcoin scalability, while ETH dominates smart contracts. However, successful L2s could divert developer attention long-term.