Bitcoin Shows Short-term Weakness as U.S. Government Transfers 20,000 BTC
Bitcoin (BTC) closed last week with a Doji Dragonfly candlestick, indicating a potential slowdown in its bullish momentum after a strong performance in early November. The price did not reach the anticipated $100k target, as whale and retail investors shifted focus to altcoins.
Last week, Bitcoin investment products experienced a net cash outflow of $457 million, while Ethereum saw a net cash inflow of approximately $634 million. This shift suggests short-term weakness for Bitcoin, further supported by over $434 million in liquidated long crypto positions within 24 hours, which may lead to a long squeeze.
US Government and its Bitcoin Holdings
On-chain data reveals that the United States holds 188,309 Bitcoins, valued at over $18 billion. Recent Bitcoin transfers by the US government indicate potential sales before President-elect Donald Trump's inauguration.
A Bitcoin address linked to the US government deposited 19,800 BTC, worth nearly $2 billion, to Coinbase Prime, following a Supreme Court ruling that allowed liquidation of the Silk Road BTC stash.
The #USGovernment deposited 10,000 $BTC($962.88M) to #CoinbasePrime.https://t.co/VPRqWoXPks pic.twitter.com/lPUCmHy1uP
— Lookonchain (@lookonchain) December 2, 2024
Speculation surrounds these deposits, with indications that the Biden administration does not favor holding Bitcoin, contrasting with the Trump administration's plans. The Biden administration aims to introduce crypto-friendly regulations and consider Bitcoin as a reserve currency amid rising debt concerns.
The political dynamics between President-elect Trump and outgoing President Biden could negatively affect Bitcoin holders' outlook. Experts suggest the Biden team may seek to complicate Trump's efforts to manage the Bitcoin reserves. Conversely, the Trump administration may pursue acquiring an additional 1 million BTC for long-term holding.
Despite these developments, the US Marshals Service is utilizing Coinbase Prime for custodial services, reducing potential selloff risks.
Reminder, this was planned since July. Hopefully we are moving it to “safeguard” the bitcoin. pic.twitter.com/CjKOv5w7ct
— Dennis Porter (@Dennis_Porter_) December 2, 2024
Overall demand for Bitcoin remains high, driven by institutional interest, particularly from MicroStrategy, which acquired an additional 15,400 BTC recently. Market data indicates that Bitcoin supply on centralized exchanges has declined significantly to about 2.27 million BTC, marking a multi-year low as of December 2.