Recently, the total cryptocurrency market has fallen below $3.2 trillion, losing over $300 billion since January 6. Bitcoin (BTC) is currently above $92,000, showing a trend of higher lows since December 30.
Adding to the bearish sentiment, reports suggest the U.S. government has been given the greenlight to sell 69,370 BTC ($6.5B) from the Silk Road seizure. This raises political tension, as president-elect Donald Trump, set to take office on January 20, had promised not to sell any of the 187,236 BTC held by the U.S. government.
Sell-Off Fear Overstated?
However, analyst Van Straten believes that the fears of a sell-off may be overstated as the potential sale of 69,370 BTC could happen in an orderly manner and may already be priced into the market.
Second, he noted that the market has absorbed over 1 million BTC since September, with Bitcoin’s price rising from $60,000 to over $100,000. The analyst also noted that when the German government sold 50,000 BTC in mid-2023, the market priced it in, and the price bottomed around $55,000 even while they still held some BTC, showing such sales don’t significantly impact the market.
Outlook Remains Bearish
QCP Capital in a Telegram broadcast shared that Bitcoin rebounded last night to $95.2K after successfully retesting the $92.5K key support. However, the outlook for BTC remains bearish during the early Asia session today after the news of US government selling their stash of seized Silk Road BTC broke out.
Traders at QCP noted that the crypto prices continue to be weighed down by macro headwinds, as last night’s Fed Minutes revealed an increasingly hawkish stance. The Fed indicated that they will slow down the pace of rate cuts given that the risks of inflation have increased.
Besides, yesterday’s ADP employment survey also added to macro uncertainty, showing a slowdown in both private-sector hiring and wage gains. This heavily contrasted with Tuesday’s JOLTS job openings, which painted a stronger labour market.
In the options market, volatility for longer-term contracts has increased, while short-term options have seen less volatility. With US markets closed today, QCP expects Bitcoin (BTC) to stay weak, likely trading between $92K and $95K. However, if Bitcoin’s price falls below $92K, it could continue to decline, potentially reaching $90K.
