Bitcoin (BTC) has run into a huge headwind, as the U.S. Justice Department recently received clearance to sell a massive chunk of around 69,000 $BTC, seized from the Silk Road marketplace. What will the potential impact be of such a large sale?
An even bigger amount of BTC than the German government sold
As the Biden administration prepares to leave office, with new president-in-waiting Donald Trump due to be inaugurated on 20 January, an enormous parting shot at crypto may be in the process of taking place.
The Department of Justice has recently been given clearance to sell a gargantuan parcel of around 69,370 BTC, which at today’s prices is equivalent to around $6.48 billion. This is an even bigger amount than the 50,000 BTC that the German government sold in June and July of 2024.
However, it’s not expected that the DOJ will sanction a sell off in the same manner as the German Government, which dumped big chunks of BTC directly onto the market, and sold off the whole amount in just three weeks.
Instead, the U.S. Marshals Service will authorise Coinbase to carry out the sale. Coinbase would be likely to sell the BTC in an orderly manner by OTC, hopefully without causing too much impact on the spot price of Bitcoin.
The current fall in the price of Bitcoin is probably just a knee-jerk reaction to the news, rather than any sales impacting the market. The news comes on the heels of a market that was already coming down due to strong jobs figures bolstering the US dollar and driving it up, while sending risk assets in the opposite direction.
Bitcoin bulls to defend possibility of a lower low
Source: TradingView
The short-term price chart for $BTC looks rather like the heartbeat for an electrocardiogram monitor. The DOJ Bitcoin sell-off news probably helped to send $BTC lower than the deepest Fibonacci level at $94,000. With this level surpassed, the bulls will need to defend a potential lower low, which could take the price under the up to now very solid support of the ascending trendline.
If this should take place, the next horizontal support lines, according to Fibonacci levels, are at $84,000, and then at $70,000, which also coincides with the top of the last bull market, and would therefore probably be the last line in the sand.
From a much more positive viewpoint, all the short-term Stochastic RSIs up to the 12-hour have bottomed, and this suggests that a bounce should be forthcoming in the not-too-distant future.
$BTC monthly candles look very bad
Source: TradingView
Zooming right out into the monthly time frame the candles at the top of this rally are enough to strike fear into the the most bullish of the bulls. A shooting star monthly candle is currently being followed by a gravestone doji candle.
If this current candle was to close as is, this should strike fear into all Bitcoin investors. However, with around three weeks left in the month, there is plenty of time for the bulls to turn this situation around. For example, if the candle closed above the 1.618 level of $102,500, this would be bullish, and could potentially help to nullify the preceding shooting star.
Donald Trump will become the next US president in two weeks time. With the tailwinds this can bring to crypto, Bitcoin can pull off its Houdini act and head in a northerly direction once again. These next three weeks will be key to a continuation of the bull market, or the start of an early bear market. Watch this space closely.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
