Bitcoin (BTC) is experiencing a turbulent week,
dropping by 2.5% to $66,280, despite being as low as $65,263 on Tuesday. The
decline follows rumors that the U.S. government is planning to sell seized
Bitcoins from the defunct dark web market, Silk Road.
Earlier in the week, BTC prices reached a record
high of $70,000 per coin. This surge was fueled by an impressive speech from
Republican nominee Donald Trump at the Bitcoin Conference 2024. Trump made
significant promises, including the dismissal of U.S. Securities and Exchange
Commission (SEC) Chief Gary Gensler, known for his strong opposition to the
crypto industry. Many industry insiders believe Gensler's policies hinder the
development of cryptocurrencies in the United States. Trump also proposed
establishing a U.S. strategic Bitcoin reserve, though he did not provide
detailed plans, and assured that Bitcoins seized by the U.S. government would
not be sold.
Contrarily, the Biden Administration is
rumored to be selling $2.0 billion in Bitcoin seized from Silk Road. Data from
Arkham Intelligence indicates that a wallet identified as belonging to the U.S.
government transferred $2 billion worth of Bitcoin to an unidentified wallet
this Monday. This has led many in the industry to believe that these Bitcoins
will be sold, similar to recent actions by the German government.
These developments have significantly impacted
the crypto market. IBIT from BlackRock and FBTC from Fidelity reported net
inflows of $27.7 million this week, a sharp decline from the $1.02 billion
inflow the previous week. When considering outflows from GBTC by Grayscale, net
inflows this week amount to only $1.7 million, down from $945.0 million last
week.
Bitcoin prices encountered resistance at the
$70,000-72,000 range. The anticipated further rally towards $78,000-80,000 by
the end of summer is now uncertain due to the rumored U.S. government Bitcoin
sell-off. While these targets remain the baseline scenario, the crypto industry
appears to lack the momentum needed for higher advancement. A potential shift
to a dovish monetary policy by the Federal Reserve (Fed) might provide the
necessary boost for cryptocurrencies.