Bitcoin’s price performance might be set to experience some turbulence following the recent approval of the US Department of Justice (DOJ) plan to sell off its seized Bitcoin assets, with blockchain analytics firm Glassnode discussing the potential impact in its latest report on the X platform.
As reported by Bitcoinist, the DOJ has been given the go-ahead to sell over 69,000 BTC (valued at over $6 billion at current market price) in a move that could significantly influence the cryptocurrency market.
In its analysis, Glassnode highlights past instances of large-scale Bitcoin sales by government entities, beginning with the German administration’s sale of 56,000 BTC in July 2024. Despite the substantial sell-off, the market reportedly absorbed the downward pressure, and the Bitcoin price surged from $53,000 to $68,000 instead of crashing.
However, Glassnode notes that this outcome may not always hold true for Bitcoin’s price when significant amounts of BTC are sold. For this specific scenario, the on-chain analytics firm points to two metrics — exchange netflows and net unrealized profit/loss (NUPL) — to gauge how the market will likely react to a potential DOJ sale.
In particular, Glassnode examines the market response when the 30-day simple moving average (SMA) of exchange inflows reaches approximately 70,000 BTC. For instance, when exchange inflows hit +70,500 BTC in March 2021 (with NUPL at 0.72, indicating euphoria/greed), the market experienced a correction before recovering over several months.
Furthermore, inflows of 68,700 BTC in June 2022 (and a NUPL of 0.21, signaling capitulation) saw the market enter a year-long bear market, triggered by LUNA’s collapse. According to Glassnode, the impact of a potential US government sale of this magnitude depends on the current state of the market.
Given that the market sentiment (based on NUPL) is currently in belief/denial, the market may be able to withstand the potential sell-side pressure from a US government sell-off. However, it remains to be seen whether investors’ cautious optimism will be sufficient to keep the Bitcoin price from crashing when such a large volume of coins hits the open market.
At the time of writing, the price of Bitcoin is hovering around $94,700, indicating a 2.4% increase in the past 24 hours. This single-day price action suggests that the flagship cryptocurrency may be experiencing a recovery from a poor weekly performance. According to CoinGecko's data, BTC's price has declined by nearly 4% over the past seven days.
