Bitcoin shows signs of short-term weakness following significant US government BTC transfers and market rotation to altcoins, despite declining exchange supply and continued institutional buying.
After an impressive performance in the first three weeks of November, Bitcoin BTC $107 951 24h volatility: 2.6% Market cap: $2.15 T Vol. 24h: $48.29 B price closed last week in a Doji Dragonfly candlestick, thus signaling a potential cooldown of the bullish momentum. The flagship coin failed to reach the much-hyped target of $100k, following a notable shift to the altcoin industry by whale and retail investors in the past few days.
Furthermore, Bitcoin’s investment products registered a net cash outflow of $457 million last week, while Ethereum’s ETH $3 715 24h volatility: 4.2% Market cap: $448.31 B Vol. 24h: $30.42 B recorded a net cash inflow of about $634 million. Following the notable crypto cash rotation to the altcoin market, Bitcoin price has signaled potential short-term weakness.
Moreover, the heightened liquidation of long crypto traders, amounting to over $434 million in the past 24 hours, is likely to trigger a long squeeze in the short term.
US Government and Its Bitcoin Holding
According to on-chain data provided by Arkham Intelligence, the United States holds 188,309 Bitcoins, worth more than $18 billion. Earlier today, the US government made several Bitcoin transfers, which suggested potential sales before the inauguration of President-elect Donald Trump.
The Bitcoin address associated with the US government deposited 19,800 BTC, worth nearly $2 billion, to Coinbase Prime. The move follows last month’s decision by the US Supreme Court, which paved the way for the 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
The US government has made several deposits of Bitcoins to Coinbase Prime this year, sparking speculation of potential sell-offs. Furthermore, the Biden administration has shown no interest in holding Bitcoin, akin to the upcoming Trump administration.
Notably, the upcoming Biden administration intends to pass crypto-friendly regulations, including adding Bitcoin as a reserve currency to hedge against the ballooning debt crisis.
The political rivalry between President-elect Donald Trump and outgoing President Biden is likely to cost Bitcoin holders a midterm bearish outlook.
Moreover, experts believe that the Biden team could be attempting to frustrate the Trump administration in its bid to hold the current Bitcoin trove. On the other hand, the US government under President Trump is likely to purchase 1 million BTC coins and hold them for the next 20 years.
Nonetheless, the US Marshals Service had opted to use Coinbase Prime for custodial services, which lowers the risks of potential selloff.
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
The overall demand for Bitcoin remains high amid the ongoing institutional FOMO led by MicroStrategy Inc (NASDAQ: MSTR), which acquired an additional 15.4k BTC units on Monday.
According to market data from Coinglass, the overall supply of Bitcoin on centralized exchanges has continued to decline exponentially in the past few months to a multi-year low of about 2.27 million BTC units as of December 2.
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