Is the US government selling coins again? Bitcoin worth $2 billion was transferred, and the 65,000 support was under "great pressure"

Crypto markets and U.S. stocks continued their downward trend on Tuesday. By the close of the day, the S&P 500, Dow Jones and Nasdaq Composite all posted sharp losses, with the Dow falling nearly 400 points, marking its worst start to a quarter since 2020.

Rising borrowing costs undermined gains in stocks, weighing on the S&P 500, with 10-year and 30-year Treasury yields hitting their highest levels since early November.

Bitcoin fell below $65,000 on Tuesday, retreating to an intraday low of $64,591.50. As of the closing of U.S. stocks, the price rebounded slightly to above $65,000. The entire cryptocurrency market fell 3.9% in the past 24 hours. Among the mainstream currencies, Bitcoin (-5.68%), Ethereum (-6.43%) and Dogecoin (-10.33%) led the decline.

The meme coin sector has plummeted by about 17% in the past 24 hours.

US government transfers nearly $2 billion in Bitcoin to Coinbase, sparking selling concerns

Market participants have been watching the U.S. government's bitcoin address transfers because any sales action has the potential to affect the price of the cryptocurrency. Typically, an increase in the amount of bitcoin flowing into exchange wallet addresses increases selling pressure on the asset and triggers a drop in the asset's price.

According to Arkham Intelligence , on April 2, 2024, the U.S. government executed a Bitcoin transfer involving nearly $2 billion , transferring tokens to a Coinbase Prime address in several transactions. The transfer amount was 30,174.70 BTC and was successfully processed at block height 837,413.

In recent years, the U.S. Department of Justice has accumulated a large amount of BTC through the crackdown of Silk Road, Bitfinex hacking, and James Zhong. The last confirmed sale was in March 2023, when the government seized approximately 50,000 bitcoins related to the Silk Road website at the end of 2022, selling 9,861 bitcoins for $216 million.

As of 1:10 PM EST on April 2, the U.S. government still holds 215,246 BTC ( worth $14 billion ) and 50,147 ETH ( worth $163 million ).

Bitcoin, already down sharply on the day, fell further on the news, dipping below $65,000 before recovering slightly.

Phyrex, a crypto analyst and commentator, commented on the X platform: “I heard that the sale transferred to the exchange has been completed and is now being delivered. If so, it depends on the delivery price and the choice of the new holder.”

The impact of the Fed’s rate cut expectations

Analysts said the shift in expectations around the pace of the Fed’s rate cuts has unnerved traders. Fed funds futures are pricing in a 40% chance the Fed will keep rates at current levels through June, according to CME Group .

Yesterday, U.S. manufacturing data came in stronger than expected. But a Fed official said three rate cuts in 2024 still seem reasonable.

Cleveland Fed President Loretta Mester said on Tuesday she continues to expect three rate cuts this year as part of the quarterly economic projections submitted at last month's Fed meeting (the same as in December), putting Mester in the slim majority of 10 officials who expect at least three rate cuts this year, while nine officials said two cuts or fewer might be appropriate based on the most likely economic forecast.

Mary Daly, president of the Federal Reserve Bank of San Francisco, said in a speech that three interest rate cuts this year is a reasonable baseline scenario, and that three interest rate cuts are a forecast, not a commitment.

Bitcoin price must remain at $65,000

In an article on April 2, cryptocurrency analyst Rekt Capital said that Bitcoin has failed to complete the retest after the breakout, and price action will continue to slow as the Bitcoin halving approaches.

Rekt said: "Bitcoin failed to complete the retest after the breakout. Technically, Bitcoin could still recover above its all-time high of around $69,000 before a new weekly candle closes." The analyst added that Bitcoin prices need to stay above the weekly low of $65,600 to avoid further losses.

According to Coinglass , if the Bitcoin price falls to the $65,000 mark, more than $249 million worth of long leveraged positions across all exchanges will be liquidated.

Technical analyst Lockridge Okoth said that if the Bitcoin price falls below the 200-day exponential moving average (EMA) support at $65,556, which has been crucial since October, the decline could extend to the $60,800 level.

On the contrary, if the 200-day moving average holds as support, the price of Bitcoin will rebound upwards. A breakout above the $69,000 support will signal more buy orders, increasing the probability of further gains, with the first target being the recapture of the $73,777 peak before having a chance to set new highs above the $74,000 range.

Andrey Stoychev, head of prime brokerage at Nexo , said the Bitcoin price adjustment was mainly attributed to new users entering the Bitcoin market in the two months since the approval of the U.S. spot ETF. Stoychev expects Bitcoin to see a short-term adjustment as new latecomers want to invest in Bitcoin.

He said: “The Bitcoin bull run has paid off, with three of the previous four cycles exceeding the previous high. Looking back at 2020, Bitcoin surged 250% in just four months after breaking its all-time high, which shows that if history repeats itself in this cycle, Bitcoin’s potential trajectory is to $231,000.”