Ethereum price action is being sustained by a pyramid scheme so if that collapses, ETH could slump

Ethereum price has seen reasonably substantial volatility in recent months. After rising hundreds percent from March’s lows to recent highs, ETH experienced a significant 35 percent pullback. Even so, ETH is still much higher than it was a few months ago, which is a bullish sign.

A Ponzi scheme is maintaining Ethereum price action

According to Dovey Wan, founding partner at Primitive Capital, Ethereum’s price action can be decided by a Ponzi scheme called “Forsage”:

“Just for whoever lives in CT bubble: the ETH price floor is not from a few foodcoin scams or potential defi vault explosion, sadly is from the liveness of Forsage, the ongoing $ETH version Plustoken.”

According to on-chain data, millions of dollars worth of capital are being sent to the Forsage contract. On average, $ 3.5 million has been sent to contracts per day over the past two months.

Forsage is intended to be a classic cryptocurrency pyramid scheme with an emphasis on the Philippines.

The country’s Securities and Exchange Commission (SEC) issued a warning about the scam:

“The Securities and Exchange Commission (SEC) has warned the public against individuals and groups engaged in unauthorized activities such as investment-taking in the guise of cryptocurrency trading and online selling. In separate advisories issued on June 30, the Commission is encouraged the public to exercise caution in dealing with Forsage, RCashOnline, and The Saint John of Jerusalem Knights of Malta Foundation of the Philippines, Inc.”

Wan believes that if this Ethereum pyramid scheme collapses or slows down, then it will pose a “biggest bear case for ETH” at the moment.

A report by a trader who analyzed on-chain data showed that scammers had obtained $ 200 million worth of Ethereum in recent months. Meanwhile, Ethereum’s fundamentals remain strong.

Real Vision CEO Raoul Pal commented that although BTC is his principal investment at the moment, he is liking Ethereum at the moment and finds it potentially outperforming BTC.

He stated:

“Bitcoin is currently the superior trade and should remain so for a while. I like both but I’m personally adding to BTC and not to gold and have a much larger weighting. I also like Ethereum, which could continue to outperform $BTC for a while still.”

His affections are directed towards decentralized finance. He has said many times that this use case could drive Ethereum adoption much higher than it currently is.

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