Is the US government selling coins again? $2 billion worth of Bitcoin was transferred, and the 65,000 support level is under great pressure

2024-04-03 11:05

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If bitcoin price breaks below the 200-day exponential moving average (EMA) support at $65,556, the decline could extend to the $60,800 level.

Original title: "The US government is selling coins again? Bitcoin worth $2 billion was transferred, and the 65,000 support was "under great pressure""

Original author: Mary Liu, BitpushNews

On Tuesday, the crypto market and US stocks continued their downward trend. As of the close of the day, the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite Index all suffered sharp losses, with the Dow falling nearly 400 points, marking the worst quarterly start since 2020.

Rising borrowing costs weakened the stock market's gains, putting pressure on the S&P 500, and the 10-year and 30-year Treasury yields hit their highest levels since early November.

Bitcoin fell below $65,000 on Tuesday, retreating to $64,591.50 as of the closing time of the U.S. stock market, and the price slightly rebounded to above $65,000. The entire cryptocurrency market fell 3.9% in the past 24 hours. Among the mainstream currencies, Bitcoin (-5.68%), Ethereum (-6.43%) and Dogecoin (-10.33%) led the decline.

The Meme coin sector plummeted by about 17% in the past 24 hours.

The U.S. government transferred nearly $2 billion in Bitcoin to Coinbase, triggering concerns about selling pressure

Market participants have been paying attention to the transfer of Bitcoin addresses by the U.S. government, as any sales actions are likely to affect the price of cryptocurrencies. Typically, an increase in the amount of Bitcoin flowing into exchange wallet addresses increases selling pressure on assets and triggers a drop in asset prices.

According to Arkham Intelligence, on April 2, 2024, the U.S. government executed a Bitcoin transfer involving nearly $2 billion, transferring tokens to Coinbase Prime addresses in several transactions. The transfer amounted to 30,174.70 BTC and was successfully processed at block height 837,413.

In recent years, the U.S. Department of Justice has accumulated a large amount of BTC through crackdowns including Silk Road, Bitfinex hacking, and the James Zhong case. The last confirmed sale was in March 2023, when the government seized approximately 50,000 bitcoins associated with the Silk Road website in late 2022, selling 9,861 bitcoins for $216 million.

As of 1:10 p.m. ET on April 2, the U.S. government still holds 215,246 BTC (worth $14 billion) and 50,147 ETH (worth $163 million).

Bitcoin had already fallen sharply that day, and after the news came out, Bitcoin fell further, falling below $65,000, and has since rebounded slightly.

Crypto analyst and commentator Phyrex commented on the X platform: "I heard that this sale transferred to the exchange has been traded, and now it is delivery. If so, it depends on the delivery price and the choice of the new holder."

The impact of the Fed's rate cut expectations

Analysts said that the change in expectations around the pace of the Fed's rate cuts has made traders uneasy. Fed funds futures show a 40% chance the Fed will keep rates at current levels through June, according to CME Group.

Yester's U.S. manufacturing data was stronger than expected. But one Fed official said three rate cuts in 2024 still seem reasonable.

Cleveland Fed President Loretta Mester said Tuesday she continues to expect three rate cuts this year as part of the quarterly economic projections she submitted at last month's Fed meeting (the same as in December), putting Mester in a slim majority of 10 officials who expect at least three rate cuts this year, while nine officials think two or fewer cuts may be appropriate based on the most likely economic forecast.

And San Francisco Fed President Mary Daly gave a speech saying three rate cuts this year is a reasonable baseline scenario and three rate cuts are a forecast, not a commitment.

Bitcoin price must remain above $65,000

Crypto analyst Rekt Capital said in an article on April 2 that Bitcoin has failed to complete a retest after a breakout, and price action will continue to slow as the Bitcoin halving approaches.

Rekt said: "Bitcoin has failed to complete a retest after a breakout. Technically, Bitcoin may still recover above its all-time high of about $69,000 before a new weekly candle closes." The analyst added that the price of Bitcoin needs to remain above the weekly low of $65,600 to avoid further losses.

According to Coinglass, if the Bitcoin price falls to the $65,000 mark, more than $249 million worth of long leveraged positions across all exchanges will be liquidated.

Technical analyst Lockridge Okoth said that if the Bitcoin price falls below the 200-day exponential moving average (EMA) support at $65,556, which has been crucial since October, the decline could extend to the $60,800 level.

On the contrary, if the 200-day EMA holds support, the Bitcoin price will rebound upwards. A break above the $69,000 support level would signal more buy orders, increasing the likelihood of further gains, with the first target being the recapture of the $73,777 peak before having a chance to set new highs above the $74,000 range.

Nexo Head of Prime Brokerage Andrey Stoychev said the Bitcoin price correction was mainly attributed to new entrants into the Bitcoin market in the two months since the U.S. spot ETF was approved, and Stoychev expects a short-term correction in Bitcoin as new latecomers want to invest in it.

He said: "The Bitcoin bull run has paid off, with three of the first four cycles exceeding the previous high. Looking back at 2020, Bitcoin soared 250% in just four months after breaking its all-time high, which shows that if history repeats itself in this cycle, Bitcoin's potential trajectory will reach $231,000."