Bitcoin and the overall market appeared to have steadied their ship after garnering some momentum to construct on within the first week of the yr. Unfortunately, the sector seems to be again the place it began, with the whole market capitalization declining by almost 3% within the final week.
One of the occasions that may have precipitated such a bearish local weather out there was the approval of the United States Department of Justice (DOJ)’s plan to dump seized Bitcoin property. Due to the numerous dimension of the cash, there’s a common sense {that a} market downturn could be on the horizon.
Is A Market Downturn On The Horizon?
In a latest submit on the X platform, blockchain analytics platform Glassnode mentioned the potential affect of a big Bitcoin sell-off by the US DOJ on worth. As Bitcoinist reported, the Department of Justice has been cleared to promote over 69,000 BTC (price over $6 billion at present market worth).
In its report, Glassnode referred to substantial Bitcoin gross sales by governments up to now, beginning with the German administration’s sale of 56,000 BTC in July 2024. According to the blockchain agency, the market absorbed the downward stress, with the Bitcoin worth leaping from $53,000 to $68,000 somewhat than slumping.
Glassnode, nonetheless, famous that this wasn’t at all times the case for the Bitcoin worth each time important quantities of BTC have been offloaded. In this explicit situation, the on-chain analytics agency highlighted two metrics (change netflows and internet unrealized revenue/loss [NUPL]) to measure how the market will react to a possible DOJ sale.
Source: Glassnode/X
Specifically, Glassnode highlighted the market’s response when the 30-day easy shifting common (SMA) of the change inflows reached round 70,000 BTC. For occasion, when the change inflows reached +70,500 BTC in March 2021, with the NUPL at round 0.72 (signaling euphoria/greed), the market skilled a correction earlier than recovering months later.
In June 2022, change inflows of 68,700 BTC and a NUPL of 0.21 (indicating capitulation) noticed the market enter right into a year-long bear market — triggered by LUNA’s collapse. From the evaluation of those metrics, it may be deduced that the affect of a possible US authorities sale of that scale relies on the present state of the market.
With the market sentiment (based mostly on NUPL) presently in perception/denial, there’s a probability that the market would possibly be capable to take up the potential sell-side stress from a US authorities sell-off. However, it’s price mentioning that traders exhibiting cautious optimism won’t be sufficient to maintain the Bitcoin worth afloat when important quantities of cash hit the open market.
Bitcoin Price At A Glance
As of this writing, the price of Bitcoin stands at round $94,700, reflecting a 2.4% enhance up to now day. This single-day motion exhibits that the premier cryptocurrency may very well be present process a resurgence after a horrendous weekly efficiency. According to CoinGecko knowledge, the Bitcoin worth is down by almost 4% up to now seven days.
The worth of BTC on the each day timeframe | Source: BTCUSDT chart on TradingView
Featured picture from iStock, chart from TradingView
