bitcoin and the broader market seemed to have stabilized its course after gaining some momentum to take advantage of the first week of the year. Unfortunately, the sector seems to be back to square one: the total market capitalization fell almost 3% in the last week.
One of the events that could have precipitated such a bearish market mood was the approval of the United States Department of Justice (DOJ) plan to dispose of seized bitcoin assets. Due to the significant size of the coins, there is a general feeling that a market slowdown could be on the horizon.
Is a market slowdown coming?
In a recent post on Platform x, blockchain analytics platform Glassnode discussed the potential impact of a major bitcoin sell-off by the US Department of Justice on the price. As Bitcoinist reported, the Department of Justice has been authorized to sell over 69,000 btc (worth over $6 billion at the current market price).
in your <a target="_blank" href="https://x.com/glassnode/status/1877442089354502362″ target=”_blank” rel=”noopener nofollow”>reportGlassnode referred to significant bitcoin sales by governments in the past, starting with the German administration's sale of 56,000 btc in July 2024. According to the blockchain company, the market absorbed the downward pressure, with the price of bitcoin jumping from $53,000 to $68,000 instead of crashing.
Glassnode, however, noted that this was not always the case for the price of bitcoin when significant amounts of btc were downloaded. In this particular scenario, the on-chain analytics firm highlighted two metrics—net trading flows and net unrealized gains/losses (NUPL)—to gauge how the market will react to a potential DOJ sale.
<img decoding="async" class="aligncenter" src="https://technicalterrence.com/wp-content/uploads/2025/01/Here39s-how-Bitcoin-price-could-react-to-a-possible-liquidation.png" alt="bitcoin” width=”1200″ height=”648″/>
Source: Glassnode/x
Specifically, Glassnode highlighted the market response when the 30-day simple moving average (SMA) of currency inflows reached around 70,000 btc. For example, when currency inflows reached +70,500 btc in March 2021, with the NUPL around 0.72 (indicating euphoria/greed), the market saw a correction before recovering months later.
In June 2022, currency inflows of 68,700 btc and a NUPL of 0.21 (indicating capitulation) caused the market to enter a year-long bear market, triggered by the collapse of LUNA. From the analysis of these metrics it can be deduced that the impact of a potential US government sale of that scale depends on the current state of the market.
Since the market sentiment (based on NUPL) is currently one of belief or denial, there is a chance that the market could absorb the potential selling pressure of a US government sell-off. However, it is worth mentioning that the Investors showing cautious optimism might not be enough to keep the price of bitcoin afloat when significant quantities of coins hit the open market.
bitcoin price at a glance
At the time of writing, the price of bitcoin is around $94,700, reflecting a 2.4% increase over the past day. This single-day action shows that the top cryptocurrency could be making a comeback after a horrendous weekly performance. According to data from CoinGecko, the price of bitcoin is down almost 4% in the last seven days.
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The price of btc on the daily timeframe | Source: BTCUSDT chart on x/evD3Tf4C/" target="_blank" rel="noopener nofollow">TradingView
Featured image from iStock, chart from TradingView
