Since mid-January, bitcoin (btc) has faced increasing selling pressure from various market players. This includes asset manager Grayscale, bankrupt crypto exchange FTX, and now the US government, which will auction a substantial amount of bitcoin seized from the infamous dark web marketplace. Silk Road.
Sale of bitcoin confiscated on the Silk Road
The United States government has filed a notice sell approximately $130 million worth of confiscated bitcoin on Silk Road. The filing states that the United States intends to dispose of the seized property as directed by the United States Attorney General.
Persons or entities, other than the defendants in the case, claiming an interest in the forfeited property must file an ancillary petition within 60 days of the initial publication of the notice.
Once all ancillary petitions have been addressed or the filing period has expired, the United States will obtain clear title to the property, allowing it to ensure good title to subsequent purchasers or assigns.
The course selling pressure in btc has resulted in a sharp 20% correction in the last 10 days. This trend is expected to continue and further amplify selling pressure. To compound the situation, asset manager Grayscale, while slowing down its selling activities, continues to transfer a significant amount of bitcoin to Coinbase.
According data from Arkham Intelligence, Grayscale recently sent an additional 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 holds 510,682 btc ($20.43 billion).
Ideal purchasing opportunities?
Adam Cochran, a leading market expert, has provided perspectives on the recent price action and the expectations of bitcoin buyers. Cochran highlights that aggregate open interest (OI) for btc has declined 17% from recent highs, but remains around 20% higher than averages seen during more stable market ranges.
Cochran notes that there have been attempts in the market to capture falling prices, suggesting a combination of “sophisticated” and leveraged buyers.
Cochran further observes that retail investors are carried away by the narratives surrounding the ETF and Halve events, which led them to buy on dips thanks to leverage. However, many investors remain unconvinced of the market's direction and are waiting for a clear entry point, according to Cochran's analysis.
In particular, Cochran highlights that current funding rates do not indicate bearish sentiment, even in options trading, suggesting an expectation of a bottom forming soon.
Market dynamics are influenced by emotions and probabilitiesand Cochran believes that too many participants are emotionally overexposing themselves by trying to bottom out the market with every dip.
This behavior has increased the likelihood that the recent price action will not bottom yet. Cochran suggests that a feeling reseta decline in the 3-month annualized basis of around 25% and a further decline in open interest would provide a healthier environment for major bets in the market.
Ultimately, Cochran emphasizes the need to reset expectations, highlighting that a period of pessimism and despair is necessary for market participants to reevaluate their positions.
Cochran notes that a range between $35,000 and $37,000 btc could be a suitable level for larger, long-term spot purchases. However, Cochran also notes that a potential drop to the $28,000 to $32,000 range could provide ideal conditions for a safe, leveraged rollout.
btc is currently trading at $39,800, a slight increase of 0.6% in the last 24 hours, but a drop of over 14% in the last fourteen days.
Featured image from Shutterstock, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.
