Bitcoin Price Flashes Short-term Weakness as the U.S. Government Transfers 20k BTC to Coinbase Prime

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As a seasoned analyst with over two decades in the financial markets under my belt, I’ve seen my fair share of market fluctuations and geopolitical dramas. In this case, Bitcoin seems to be caught between a rock and a hard place – on one side, institutional FOMO keeps the demand high, while on the other, the US government’s Bitcoin maneuvers are causing a stir.

Following three strong weeks in November, Bitcoin (BTC) ended last week with a Doji Dragonfly candlestick pattern, suggesting a possible slowdown in its bullish trend. Despite high expectations, Bitcoin didn’t hit the $100k mark due to a recent movement towards altcoins by large and small investors over the past few days.

Additionally, Bitcoin investment products experienced a weekly outflow of approximately $457 million, whereas Ethereum‘s saw an inflow of around $634 million. This significant shift in cryptocurrency holdings toward Ethereum may hint at potential temporary vulnerability in the price of Bitcoin.

Additionally, the large-scale selling off by long-term cryptocurrency traders, totaling approximately $434 million within the last day, could potentially instigate a “short squeeze” in the near future.

US Government and its Bitcoin Holding

Based on information from Arkham Intelligence’s on-chain data, the U.S. has approximately 188,309 Bitcoins, valued at over $18 billion. Today, there have been indications that the U.S. government might be considering selling some Bitcoins before President-elect Donald Trump takes office, as suggested by recent Bitcoin transfers made by them.

19,800 Bitcoins, valued at approximately $2 billion, were transferred from a Bitcoin address linked to the US government to Coinbase Prime. This action is a result of the U.S. Supreme Court’s decision from last month, which authorized the sale of the Bitcoin hoard tied to the Silk Road case.

The #USGovernment deposited 10,000 $BTC($962.88M) to #CoinbasePrime.

— Lookonchain (@lookonchain) December 2, 2024

This year, the U.S. government has transferred various amounts of Bitcoin into Coinbase Prime’s account, which has fueled rumors about possible Bitcoin sell-offs. Additionally, it appears that the current Biden administration is disinterested in owning Bitcoin, much like the previous Trump administration was.

Significantly, the incoming Biden administration plans to introduce cryptocurrency-friendly legislation. This could involve recognizing Bitcoin as a potential reserve currency to help manage the growing debt crisis.

As a crypto investor, I’ve been pondering about the potential impact of the ongoing political tussle between President-elect Donald Trump and President Biden on my Bitcoin investments. It seems plausible that this rivalry might lead to a more bearish outlook for Bitcoin in the midterm.

Additionally, experts speculate that the Biden administration might aim to hinder the efforts of the Trump administration in trying to retain the current supply of Bitcoin. Conversely, it’s speculated that the US government, under President Trump, could be planning to acquire a million Bitcoin coins and store them for the following two decades.

However, the U.S. Marshals Service decided to employ Coinbase Prime for its custody services, a choice that minimizes the risk of a possible sell-off.

Reminder, this was planned since July. Hopefully we are moving it to “safeguard” the bitcoin.

— Dennis Porter (@Dennis_Porter_) December 2, 2024

The interest in Bitcoin continues to be strong, fueled by the fear of missing out among institutions, particularly MicroStrategy Inc., as they purchased approximately 15,400 more Bitcoin units on Monday.

Based on information from Coinglass, the amount of Bitcoin held on centralized exchanges has been decreasing dramatically over the past few months, reaching a level not seen for several years, approximately 2.27 million Bitcoin units, by early December.

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2024-12-03 00:36