Key Points
- Bitcoin’s price shows signs of short-term weakness after failing to reach the hyped $100k target, with a shift in investments to altcoins.
- The U.S. Government has transferred 20k BTC to Coinbase Prime, sparking speculation of potential sell-offs.
Bitcoin (BTC) displayed a promising performance during the first three weeks of November. However, the price closed last week with a Doji Dragonfly candlestick, indicating a potential slowdown in the bullish momentum.
Despite the hype, Bitcoin did not reach the $100k target. This was largely due to the shift of retail and whale investors towards the altcoin industry in recent days.
Investment Shifts and Market Weakness
Last week, Bitcoin’s investment products experienced a net cash outflow of $457 million. In contrast, Ethereum’s products recorded a net cash inflow of approximately $634 million. This significant rotation of crypto cash to the altcoin market has prompted Bitcoin’s price to show potential short-term weakness.
Furthermore, the liquidation of long crypto traders, which amounted to over $434 million in the past 24 hours, could cause a long squeeze in the short term.
The U.S. Government’s Bitcoin Holdings
On-chain data provided by Arkham Intelligence reveals that the United States holds 188,309 Bitcoins, worth more than $18 billion. The U.S. government made several Bitcoin transfers today, indicating potential sales before President-elect Donald Trump’s inauguration.
The Bitcoin address associated with the U.S. government deposited 19,800 BTC, roughly $2 billion, into Coinbase Prime. This follows the U.S. Supreme Court’s decision last month that cleared the way for the liquidation of the Silk Road BTC stash.
The U.S. government has made several Bitcoin deposits to Coinbase Prime this year, leading to speculation about potential sell-offs. The Biden administration, like the upcoming Trump administration, has shown no interest in holding Bitcoin.
The upcoming Biden administration plans to pass crypto-friendly regulations, such as adding Bitcoin as a reserve currency to hedge against the escalating debt crisis. The political rivalry between President-elect Donald Trump and outgoing President Biden could result in a midterm bearish outlook for Bitcoin holders.
Experts suggest that the Biden team might be trying to hinder the Trump administration’s efforts to hold the current Bitcoin trove. Conversely, the U.S. government under President Trump might purchase 1 million BTC coins and hold them for the next 20 years.
However, the U.S. Marshals Service has decided to use Coinbase Prime for custodial services, reducing the risk of potential sell-offs.
Despite the political uncertainty, the overall demand for Bitcoin remains high due to ongoing institutional FOMO. MicroStrategy Inc. (NASDAQ: MSTR) contributed to this demand by purchasing an additional 15.4k BTC units on Monday.
Market data from Coinglass shows that the overall supply of Bitcoin on centralized exchanges has been decreasing exponentially over the past few months. As of December 2, it reached a multi-year low of about 2.27 million BTC units.
