$6.5 Billion US Bitcoin Sale Scare Fuels Bearish BTC Setups

The United States Department of Justice (DOJ) has received court authorization to sell 69,370 Bitcoin (BTC) worth $6.4 billion seized in a historic Silk Road-related crypto hack.

The Bitcoins were originally stolen in 2012 and recovered in 2020 during a renewed investigation into the Silk Road marketplace. Its hacker agreed to forfeit the stolen assets via a consent agreement.

Still, the process faced delays due to a claim by Battle Born Investments, which alleged ownership of the coins through bankruptcy estate purchases. After failing to substantiate their claim through a Freedom of Information Act (FOIA) request, the court ultimately granted the DOJ the authority to sell.

Market Concerns Over $6.5 Billion Sale

The DOJ’s impending Bitcoin sale has raised concerns over its potential impact on market dynamics. Bitcoin, which hit a new all-time high of over $108,000 in December 2024, has retraced to $92,000, partly due to bearish sentiment fueled by the announcement.

Historically, the U.S. government’s large-scale liquidations of seized Bitcoin have resulted in short-term price corrections due to increased supply against lowering demand.

Speculation that the sale could disrupt President-elect Donald Trump’s pro-crypto policy plans adds to market jitters.

Joe Biden’s DOJ could soon decide the fate of $6.49B in seized bitcoin, leaving the crypto world on edge 🤔💰. Will they sell or hold?

– Court order paves way for the DOJ to keep or sell 69,370 bitcoin.
– The bitcoin was seized from a hacker tied to the Silk Road.
– The value…

— Bitcoin.com News (@BTCTN) January 9, 2025

Trump, who has pledged to establish U.S. crypto reserves akin to gold or oil, may face hurdles in executing his vision if the outgoing Joe Biden administration sells about $19 billion of Bitcoin it holds via the DOJ.

Bitcoin Rising Wedge Signals $90K Breakdown Target

Bitcoin’s price action is flashing cautionary technical signals, with a potential breakdown forming within a rising wedge structure on the 4-hour chart. Rising wedges, often bearish patterns, indicate weakening bullish momentum.

Currently trading around $94,228, Bitcoin has tested key support levels near $92,000. In line with its measured move, a breakdown from the wedge could see Bitcoin decline towards $90,000. Key indicators such as the Relative Strength Index (RSI) remain neutral at 44, leaving room for additional downside.

The 50-EMA and 200-EMA, both trending downward, have established resistance levels near $96,000 and $97,000, respectively. Trading volume has also declined, indicating weakening buying interest. The $90,331 level emerges as the next critical support zone, representing a crucial area for bulls to defend in the short term.

Bitcoin RCV Signals Overheated Conditions

Dollar-cost averaging (DCA) investors now have a quantitative risk tool in the form of the 60-day Realized Value to Market Capitalization Variance (RCV). This metric evaluates Bitcoin’s relative valuation by comparing its realized and market caps over a 60-day rolling window.

RCV helps categorize market conditions into risk tiers:

• Low Risk (< 0.30): Favorable for accumulation.
• Neutral Risk (0.30–0.50): Balanced risk-reward.
• High Risk (> 0.50): Overheated markets.

Additionally, Standardized RCV quantifies risk deviations from historical norms, offering deeper insights into whether market risk is intensifying or subsiding. The standardized RCV hovers at elevated levels, suggesting an overheated market and warning of potential downside risk.

These indicators give investors actionable insights to optimize entry points and exposure during extreme market conditions. As the Bitcoin market matures, tools like RCV provide essential frameworks for informed decision-making.

Bitcoin Accumulation Opportunities Remain

The Short-Term Holder Spent Output Profit Ratio (SOPR), which reflects market sentiment among investors holding Bitcoin for less than six months, has fallen below 1 to 0.987. This level indicates that short-term holders are selling at a loss. Historically, such behavior has aligned with market bottoms and subsequent price recoveries.

Comparative fractals from 2023 reveal that periods of negative SOPR often preceded sharp bullish rallies, providing a counterintuitive signal for accumulation. For example, during Bitcoin’s correction to $27,000 in mid-2023, SOPR fell below 1, sparking a surge to new highs by year-end.

Macro indicators, including MVRV, NUPL, and the Puell Multiple, suggest that Bitcoin’s current correction is a mid-cycle retracement rather than the end of its broader uptrend. Notably, 60% of Bitcoin’s circulating supply remains held by short-term investors—consistent with prior bullish setups.

As bearish sentiment dominates, historical patterns suggest strategic accumulation opportunities for long-term investors. Selling at current levels could prove unwise, with significant upward potential remaining in Bitcoin’s ongoing market cycle.

UTXO Age Bands Show Long-Term Holder Confidence

The UTXO Age Bands, which track the percentage of Bitcoin supply held across different holding periods, indicate that long-term holders remain steadfast despite recent market volatility. Over 60% of Bitcoin’s supply has been held by wallets that have been inactive for more than six months, a strong signal of market confidence.

Comparative data from prior cycles show similar patterns during accumulation phases preceding parabolic rallies. For instance, in 2017 and 2020, elevated long-term holder supply percentages correlated with bullish trends. This suggests that Bitcoin’s long-term market structure remains intact, even amid short-term corrections.

Long-term holder conviction underscores Bitcoin’s potential for sustained growth, particularly as macroeconomic uncertainties and institutional interest continue to drive adoption.