According to Arkham Intelligence, a wallet believed to be controlled by the United States government transferred 300 Ether ( ETH ), valued at approximately $699,000, to a wallet address ending in “d46” on Aug. 5.

The onchain analytics firm also claimed that the funds within the wallet, which now shows a balance of $0, resulted from a US government seizure.

US government transfers 300 ETH — Arkham Intelligence image 0 Source: Arkham Intelligence

Ethereum's price action

This reported transfer of ETH by the United States government follows days of  disappointing price action  following the highly anticipated launch of Ethereum exchange-traded funds (ETFs) in the United States.

Independent analyst Crypto Lion said that ETH’s struggling price action following the ETF launch was mainly attributable to a  lack of demand for the smart contract asset on exchanges.

The lack of demand coincides with a significant downturn across financial markets due to an interest rate increase by the Bank of Japan that sent the price of Ethereum tumbling further.

Related: Jump Trading’s Ether dump: Smart move or sign of trouble?

US government transfers 300 ETH — Arkham Intelligence image 1 A snapshot of Ethereum's price action. Source: TradingView

Ether encountered  significant selling pressure largely attributable to a handful of market makers, who unloaded approximately 130,000 ETH, valued at $290 million at the time of writing, onto the market. This caused Ether to sink to lows of around $2,100 on Aug. 5, and the digital asset continues to trade well below its 200-day exponential moving average.

Ethereum ETF outflows

According to the CoinShares weekly inflows report dated Aug. 5, digital asset investment vehicles recorded their first  capital outflow  in four weeks.

Outflows for Ethereum investment funds and products totaled $146 million for the week, bringing the total outflow figure since the launch of the Ethereum ETF in the United States to $430 million.

US government transfers 300 ETH — Arkham Intelligence image 2 Flow data for digital asset investment vehicles. Source: CoinShares

CoinShares noted that the data was impacted by $603 million in outflows from Grayscale’s Ethereum Trust, which was introduced in 2017 and has seen  significant outflows since the introduction of Ethereum ETFs in late July.

CoinShares analyst James Butterfill reinforced the theory that the current market downturn is primarily driven by macroeconomic factors and geopolitical tensions. This negative sentiment among investors may potentially signal a  longer recovery period for ETH than was initially expected.

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