As an analyst, I find myself pondering over the implications of a significant event in the Bitcoin (BTC) market: The U.S. Justice Department’s upcoming sale of approximately 69,000 BTC, confiscated from the Silk Road marketplace. The potential impact of this substantial transaction on the price and overall sentiment of Bitcoin is an intriguing question that I am eager to explore further.
An even bigger amount of BTC than the German government sold
As the Biden presidency comes to a close and President-elect Donald Trump is set to take office on January 20th, there could be a significant departure move regarding cryptocurrencies in progress.
The Justice Department has just been authorized to sell a massive quantity (approximately 69,370 Bitcoins), which translates to roughly $6.48 billion at current values. This sale surpasses the amount (50,000 BTC) that the German government offloaded in June and July of 2024.
Nonetheless, it’s unlikely that the DOJ would follow suit with the German Government’s approach, where they swiftly sold large portions of Bitcoin within a mere three weeks on the open market.
In this case, the U.S. Marshals Service has given permission for Coinbase to execute the sale. More than likely, they will sell the Bitcoin through Over-the-Counter (OTC) transactions, aiming to do so in a methodical way that minimizes any significant influence on the current market price of Bitcoin.
It seems more likely that the recent drop in Bitcoin’s price is a short-term response to the latest news, rather than a significant selling event affecting the market. The news arrives at a time when the market was already trending downwards due to robust employment data strengthening the US dollar and causing it to rise, while pushing risk assets towards decline.
Bitcoin bulls to defend possibility of a lower low
The temporary Bitcoin price graph seems similar to an electrocardiogram’s heartbeat pattern. The news about the DOJ selling off Bitcoins likely contributed to pushing its price below the deepest Fibonacci level at $94,000. Now that this level has been surpassed, the bulls must prepare to guard against a potential lower low, which could cause the price to drop below the previously robust trendline support that has held firm up until now.
If this event occurs, potential horizontal resistance points, based on Fibonacci levels, could be found at approximately $84,000 and then $70,000. Notably, the $70,000 level aligns with the peak of the previous bull market, making it a significant barrier. Therefore, this level might serve as the final boundary before any potential price decline.
Looking at things from a hopeful perspective, it appears that the temporary Technical RSIs, within the last 12 hours, have reached their lowest points. This indicates that a recovery might soon occur in the near term.
$BTC monthly candles look very bad
Looking at a broader, monthly perspective, the candles on top of this recent rally could worry even the most optimistic investors. This rally is ending with what’s known as a “shooting star” monthly candle, followed by a “gravestone doji” candle. These patterns suggest potential reversal or correction in the near future.
If the current candle ends in its current state, it might instill fear among Bitcoin investors. But since there are roughly three weeks remaining in the month, there’s still ample opportunity for the bulls to reverse this trend. For instance, if the candle closes above the 1.618 level of approximately $102,500, this would be a positive sign and could potentially counteract the preceding shooting star.
In about two weeks, Donald Trump is expected to take office as the U.S. president. This development could potentially boost crypto markets, and Bitcoin might make another sudden surge northward. The upcoming three weeks will be crucial in determining whether we’ll see a prolongation of the bull market or an early onset of a bear market. Keep a close eye on these developments.
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2025-01-09 16:02