Key Points
- Bitcoin price dips below $93K as the US government gets approval to sell 69,370 BTCs, leading to increased selling pressure.
- The fear of more crypto correction rises as Bitcoin nears a vital support level above $92K.
Bitcoin’s price has fallen over 3% in the last 24 hours, hitting a daily low of approximately $92,806.
This downward trend was mirrored in the altcoin industry, resulting in the liquidation of over $483 million, predominantly involving long traders.
Increasing Fear of Crypto Correction
The anxiety over further crypto correction has escalated as Bitcoin’s price nears a key support level above $92k.
Additionally, Bitcoin’s fear and greed index has declined from 78% to 69% over the past two days.
Bitcoin’s price is projected to maintain a bearish outlook after forming a potential head and shoulders (H&S) pattern along with a bearish divergence of the daily Relative Strength Index (RSI).
According to renowned trader Peter Brandt, Bitcoin’s price on the daily time frame could be forming the Hump Slump Bump Dump Pump and Dump pattern.
However, a consistent closure below the support level above $92K will likely lead to a price drop to the range between $85K and $86K in the near term.
Why Bitcoin Price Dropped
Bitcoin’s price experienced increased selling pressure following the announcement that the US government has been authorized to sell 69,370 BTCs seized from the now-defunct darknet marketplace Silk Road.
The court’s decision to sell Bitcoins worth around $6.5 billion follows long legal battles over ownership.
The US Marshals service, which has been depositing funds into Coinbase Prime in recent months, is set to manage the liquidation of the Silk Road BTCs.
Interestingly, the sale of Silk Road’s Bitcoin stash comes just days before the highly anticipated second inauguration of President-elect Donald Trump.
During his campaign, Trump pledged to have the US government retain the 197K BTCs in addition to the strategic BTC reserve.
Bitcoin’s price felt increased selling pressure as all US spot BTC ETF issuers recorded a net cash outflow of $582 million.
Fidelity’s FBTC and BlackRock’s IBIT registered a net cash outflow of about $258 million and $124 million respectively.
Market Outlook
The ongoing Bitcoin correction was largely anticipated following its impressive growth in the last two months of 2024.
Similar corrections occurred in January of 2017 and 2021 before continuing with a parabolic rally in the following months.
The impending change in the US administration to a pro-crypto regime will significantly influence Bitcoin’s price action in the upcoming months.
Moreover, the adoption of Bitcoin by corporate investors has increased over the past year following the impressive performance of MicroStrategy Inc (NASDAQ: MSTR) and the spot BTC ETF issuers.
More nation-states have been considering Bitcoin as a hedge against inflation following the GDP growth of El Salvador.
As a result, the supply of Bitcoin on centralized exchanges will continue to decrease as institutional investors speed up the accumulation pace.
