Why does encryption break down? The Fed’s hawkish stance and Bitcoin’s Silk Road sell-off are weighing on Bitcoin

Recently, the total cryptocurrency market fell below $3.2 trillion, losing more than $300 billion since January 6. Bitcoin (BTC) is currently above $92,000, showing a trend toward higher declines since December 30.

In addition to bearish sentiment, Reports It indicates that the US government has been given the green light to sell 69,370 bitcoins ($6.5 billion) from the Silk Road seizure. This raises political tension, as President-elect Donald Trump, who is set to take office on January 20, has promised not to sell any of the 187,236 bitcoins held by the US government.

Fear of selling too much?

However, analyst Van Straaten believes that fears of a sell-off may exist exaggerated Since the potential sale of 69,370 BTC could happen in an orderly manner and may already be priced in the market.

Second, he noted that the market has absorbed more than 1 million Bitcoin since September, with the price of Bitcoin rising from $60,000 to more than $100,000. The analyst also noted that when the German government sold 50,000 bitcoins in mid-2023, the market priced them in, and the price bottomed out around $55,000 even while they were still holding some bitcoin, showing that such sales do not significantly impact the market.

Expectations remain bearish

QCP Capital in a telegram broadcast He shared that Bitcoin rebounded last night to $95.2K after successfully retesting the key support of $92.5K. However, the outlook for Bitcoin remains bearish during today’s early Asian session after news emerged of the US government selling its seized Bitcoin Silkroad stock.

Traders at QCP note that cryptocurrency prices continue to be affected by macro headwinds, as minutes from last night’s Fed meeting revealed an increasingly hawkish stance. The Federal Reserve has indicated that it will slow the pace of interest rate cuts due to rising inflation risks.

Besides, yesterday’s ADP employment survey also added to the overall uncertainty, showing a slowdown in private sector hiring and wage increases. This is in sharp contrast to Tuesday’s JOLTS job openings results, which charted a stronger job market.

In the options market, volatility increased for long-term contracts, while short-term options saw lower volatility. As US markets close today, QCP expects Bitcoin (BTC) to remain weak, likely trading between $92K and $95K. However, if Bitcoin price drops below $92,000, it may continue to fall, potentially reaching $90,000.