Ethereum Price Dives 10% To $131: Here's Why It Crashed

The bellwether for the recent drop in digital assets on Monday wasn't its usual culprit in Bitcoin (BTC ), Ethereum (ETH) was largely the suspect as it led the rest of its crypto counterparts in a 10% price dive.

Cryptocurrencies are red all across the board thanks to an ETH sell-off that happened in minutes. From $140.70, Ethereum fell to under $130, and the rest of the crypto market followed suit. Bitcoin finally broke below $7,000 after lingering for more than three weeks above it.

As of the time of writing, most cryptos are still in the red with Coindesk prices showing Litecoin (LTC) with a 24-hour change of -7.88%, Ripple (XRP) with -8.02%, Bitcoin Cash (BCH) changing -5.12%, and Bitcoin SV (BS) with 6.13%.

The cause of the price drop was attributed to a report from Bloomberg that cited a Chinese crypto scam, according to NEWSBTC. The scam's perpetrator was a certain PlusToken that allegedly dumped an estimated $2 billion worth of tokens to exchanges so that the scammers can cash out.

PlusToken used the classic Ponzi scheme to dupe all its investors in giving up those billion dollars worth of cryptos. What attracted investors was a ludicrous return of 600% and guaranteed rewards to those who would recruit new members. And, to make their offer more believable, PlusToken even had a listing on Chinese exchanges and presented itself as a legitimate company.

Chainalysis, the publisher of the report cited by Bloomberg, noted that they were able to track 800,000 ETH and 45,000 BTC that the scammers transferred to their addresses to launder. And of those 800,000 ETHs, only 10,000 has been cashed out, and the remaining 790,000 remained "untouched in a single Ethereum wallet for months." Also, 20,000 Bitcoins -- which roughly converts to $137 million -- are remaining from the 45,000 tracked from the criminals.

Knowledge of these dormant ETH and the fact that criminals had still been cashing out the stolen digital assets, particularly BTC, led to the market shorting the second most popular crypto.

As of press time, at $6,855, BTC is nearing the support line drawn from July that held through the end of September up to October and had been revisited again in November. Ethereum, on the other hand, is trading at $130.