Key Takeaways:
During the early hours of Wednesday, Bitcoin’s (BTC) price inched towards the $66,000 level, losing all gains from last week after wallets linked to the US government moved significant amounts of the world’s most valuable cryptocurrency to exchanges.
US Government Wallet Transfers $2 Billion Worth of Bitcoin To Exchanges, Creating Selling Pressure
BTC price dented as much as 5% over the past 24 hours after the US Marshals Service transferred $2 billion worth of the digital currency to two new wallets. According to the on-chain tracking platform Arkham Intelligence, at least one of these wallets was linked to a crypto custodial service.
The wallet tagged as ‘US Government: Silk Road DOJ’ transferred 29,800 BTC seized from the infamous dark web marketplace Silk Road to an unlabeled address with no prior history of transactions. The wallet moved 19,800 BTC to one wallet and 10,000 BTC to another wallet.
Analysts at Arkham Intelligence suspect that the transfer of 10,000 BTC, worth $670 million, was deposited to an institutional crypto custody service. Their data also shows that before the transfer, the US government held $12 billion worth of Bitcoin seized from illicit gains.
These transactions led to Bitcoin tumbling below $67,000, further extending its decline from Tuesday’s session high of $70,000.
Analysts Say Sellers Are In Currently In Control of The Bitcoin Market
An analyst from CryptoQuant has drawn attention to a particular trend linked to the Coinbase Premium Index (CPI), which suggests further downside for Bitcoin. The Coinbase Premium Index is an analytical tool measuring the variance between BTC’s price on Coinbase Pro and other major cryptocurrency exchanges.
When this indicator is placed alongside Bitcoin’s Simple Moving Average over 14 days (SMA14), it shows a significant correlation with the asset’s selling pressure. The CPI value for Bitcoin is negative, suggesting it is changing hands at a lower price on Coinbase Pro than other platforms.
The CryptoQuant analyst who goes by the name ‘Burakkesmeci’ said this phenomenon has been observed more frequently ever since the US Securities and Exchange Commission (SEC) approved the trading of spot exchange-traded funds (ETFs), which seems to have amplified the significance of the Coinbase Premium Index as a leading price indicator.
The analyst claims that in 2024, the data reveals a clear pattern where Bitcoin was faced with price corrections whenever the CPA dipped below its SMA14. It results in a bearish market sentiment when the index falls short of the Simple Moving Average, signaling increased selling activity.
Burakkesmeci noted that the CPI currently stands at -0.008, with the SMA14 at 0.020. According to his observations, such disparity indicates that sellers are in control of the US Bitcoin market.
The phenomenon of a seller-driven market, as indicated by the CPI, is also seen in Bitcoin’s current price performance. The apex cryptocurrency has lost roughly 2% of its value in the past seven days.
On Tuesday, Bitcoin’s market capitalization declined by over $40 billion. This was in stark contrast to its 24-hour trading volume yesterday, which surged from below $30 billion to $36.7 billion.
Interest Rate Decision From Major Central Banks Will Be Key To Bitcoin’s Price Performance
However, other market experts remain optimistic, despite the negative price performance. Renowned trader ‘Crypto Rover’ said he believes BTC is consolidating inside a bull flag pattern. He claims this is the “worst time” to be bearish because the price breakout will be “massive”.
Keen observers also noted that macroeconomic decisions like interest rate decisions from three major central banks – the Bank of Japan, the US Federal Reserve, and the Bank of England, which is expected on Wednesday and Thursday, could further increase market volatility.
How Did Other Cryptocurrencies Fare?
Solana (SOL) topped the charts on losses among major altcoins, losing 6% of its value in the last 24 hours. The cryptocurrency surged on Monday as meme-coin trading heated up on its blockchain during the weekend, resulting in on-chain trading volumes surging over that of Ethereum (ETH).
Meanwhile, Bitcoin’s losses also caused Cardano (ADA) to drop by 5%, Dogecoin (DOGE) and BNB Chain (BNB) to fall by 4%, and Ripple (XRP) to decline by 3%. Despite a 1% price decline and spot Ethereum ETFs witnessing a $97 million net outflow on Monday, Ether (ETH) managed to show relative strength.
At the time of writing, Bitcoin (BTC) is trading at $66,491 – down 0.53% over the last 24 hours.
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