Since mid-January, Bitcoin (BTC) has been facing increasing selling pressure from various market players. This includes asset manager Grayscale, bankrupt crypto exchange FTX and now the US government, which is about to auction off a significant amount of Bitcoin seized from the infamous dark web marketplace. Silk Road.
Sale of seized Silk Road Bitcoin
The US government did that submitted a report to sell approximately $130 million worth of Bitcoin seized from Silk Road. The filing states that the United States intends to dispose of the forfeited property as directed by the United States Attorney General.
Individuals or entities, other than the defendants in the case, claiming an interest in the forfeited property must file a supplemental petition within 60 days of the initial publication of the notice.
Once all additional requests have been processed or the filing period has expired, the United States will obtain clear title to the property, allowing it to guarantee good title to subsequent purchasers or transferees.
The ongoing sales pressure on BTC has resulted in a sharp correction of 20% over the past 10 days. This trend is expected to continue and further strengthen the selling pressure. What makes the situation worse is that asset manager Grayscale, while slowing down its selling activities, is transferring a significant amount of Bitcoin to Coinbase.
According to facts from Arkham Intelligence, Grayscale recently sent another 10,000 BTC worth $400 million to Coinbase.
Since the approval of Bitcoin spot exchange traded fund (ETF), Grayscale has deposited a total of € 103,134 BTC ($4.23 billion) to Coinbase Prime. Currently, Grayscale owns 510,682 BTC ($20.43 billion).
Ideal purchasing opportunities?
Adam Cochran, a leading market expert, provided this insights in the recent price action and Bitcoin buyers’ expectations. Cochran highlights that total open interest (OI) for BTC is down 17% from recent highs, but is still about 20% higher than the averages seen during more stable market ranges.
Cochran notes that there have been attempts in the market to offset falling prices, indicating a mix of “sophisticated” and leveraged buyers.
Cochran further notes that retail investors are guided by stories surrounding the ETF halving of events, which led them to buy dips based on leverage. However, according to Cochran’s analysis, many investors are still unconvinced of the market’s direction and are waiting for a clear entry point.
In particular, Cochran emphasizes that current funding rates do not indicate bearish sentiment, even in options trading, indicating that a bottom formation is expected soon.
The dynamics of the market are influenced by emotions and probabilitiesand Cochran believes that too many participants emotionally overexpose themselves by trying to hit the bottom of the market on every dip.
This behavior has increased the likelihood that the recent price action has not yet bottomed out. Cochran suggests that a sentiment reseta three-month annualized decline of around 25%, and a further decline in open interest, would create a healthier environment for major players in the market.
Ultimately, Cochran emphasizes the need for a reset of expectations, emphasizing that a period of doom and desperation is necessary before market participants can reassess their positions.
Cochran points out that a range between $35,000 and $37,000 BTC could be an appropriate level for larger spot purchases in the longer term. However, Cochran also notes that a potential drop to the $28,000 to $32,000 range could provide ideal conditions for a confident leveraged bet.
Currently, BTC is trading at $39,800, up slightly 0.6% in the past 24 hours, but down over 14% in the past fourteen days.
Featured image from Shutterstock, chart from TradingView.com
Disclaimer: The article is for educational purposes only. It does not represent NewsBTC’s views on buying, selling or holding investments and of course investing involves risks. You are advised to conduct your own research before making any investment decisions. Use the information on this website entirely at your own risk.