The Bitcoin (BTC) price is eyeing a possible breakout to the south of the $65,000 level as the market readies itself for a potential $2.1 billion sale of confiscated Silk Road Bitcoin tokens by the US government.
A wallet associated with the US Department of Justice just moved 30,174.7 BTC tokens to a Coinbase wallet.
That’s according to on-chain data presented by blockchair.com, which values the Bitcoin moved at just over $2.1 billion.
A US court finalized the forfeiture of 69,370 BTC tokens confiscated from Dark Web market Silk Road last December.
Traders will now be monitoring for any potential rise in sell pressure on Coinbase’s BTC spot market.
If the US government did embark on a fire sale of its Silk Road Bitcoin, that could heavily pressure BTC.
Other’s, like crypto influencer @MartyParty, theorized that the DoJ could be moving its Silk Road Bitcoin to Coinbase for custody.
Breaking: US Dept of Justice moved 30174.7 Bitcoin today from their Silk Road DOJ Confiscated Funds wallet bc1qmxjefnuy 👀
0.00100000 Bitcoin went to @coinbase
3KrZVU9Jz4UKHpKUtuvkEMX1tY8zeiTvX2 as a test transaction?30174 Bitcoin went to a new wallet… pic.twitter.com/LIk62rCRtf
— MartyParty (@martypartymusic) April 2, 2024
In other words, they could just be moving the Silk Road Bitcoin to Coinbase for holding purposes, not to sell.
Either way, uncertainty about a potential near-term rise in sell pressure is set to keep the market on edge.
Indeed, last trading in the mid-$65,000s, Bitcoin is down over 6% on Tuesday.
Bitcoin’s pullback also comes amid unfavorable macro conditions.
US stocks are sharply lower since the start of the week while US yields and the US dollar are up following strong US manufacturing activity data on Monday that is being interpreted as pushing back on the timeline of expected Fed rate cuts.
Expectations that the Fed will soon start cutting interest rates has been an important tailwind for BTC this year.
Where Next for BTC as Market Worries About Silk Road Bitcoin Sale?
Bitcoin’s latest price dip has caused some alarm among technicians, given it may have snapped a medium-term uptrend.
Technical analysis suggests a strong likelihood of a near-term test of the $60,000 area, where there is decent support.
A breakdown below $60,000 then opens the door to a drop all the way back to the low $52,000s. This is the next major support zone.
If the US government began a fire sale of its Silk Road Bitcoin, these levels could quickly be tested.
But whether the BTC price would dip this aggressively back from its recent highs near-$74,000 remains to be seen.
20-30% retracements during a Bitcoin bull market haven’t historically been uncommon. But the Bitcoin market is much more mature now than it was back in 2020/21, or in prior years.
Spot Bitcoin ETFs are here, and another halving is less than three weeks away. Aggressive dip buying amid these bullish themes is to be expected.
While continued consolidation ahead of the halving is likely, risks remain tilted towards Bitcoin hitting $100,000 later this year.