A recent report from CryptoQuant analyzes the potential impact of the pending $6.5 billion Bitcoin sales by the DoJ on prices.
Concerns have filled the market over the U.S. Department of Justice’s (DoJ) approval to sell 69,370 Bitcoin worth $6.5 billion. Notably, the U.S. DoJ seized the BTC from the Silk Road hacker in 2020, and the latest court order puts an end to an extensive battle over its ownership.
Amid the concerns, CryptoQuant called attention to the current bearish pressure on Bitcoin price, as the token dropped to $93,500 after a 13.5% slump from its all-time high of $108,000 in December 2024.
DOJ cleared to sell $6.5B in seized Silk Road Bitcoin.
Here are 5 on-chain charts to navigate through the potential impact.
Let’s break it down 👇 pic.twitter.com/a5YeRUWhE3
— CryptoQuant.com (@cryptoquant_com) January 9, 2025
The platform confirmed that the decline represents the steepest pullback of 2025 and one of the most significant corrections over the past three months. However, they revealed that the ongoing turbulence is not a direct result of the DoJ sale.
Despite fears surrounding the sale, CryptoQuant pointed out that the Silk Road Bitcoin remains unmoved for now. This begs the question: “What, then, is behind the ongoing crash?” The analysis points to short-term pressures, particularly from short-term holders.
STH Selling Bitcoin at a Loss
CryptoQuant revealed that short-term Bitcoin holders have been offloading their assets at a loss. Within the past 24 hours alone, 36,400 BTC were transferred from these holders to exchanges, with the Spent Output Profit Ratio (SOPR) dipping below 1.
This metric suggests that most of these coins are being sold below their purchase prices. Notably, the selling activity highlights negative sentiment among short-term investors, who often react to bearish headlines and price corrections.
CryptoQuant notes that this trend has led to Bitcoin’s SOPR falling to 0.987, indicating heightened selling pressure from investors holding BTC for less than six months.
Long-Term vs. Short-Term Impact
While fears around the potential sale of the $6.5 billion remains, CryptoQuant emphasizes that its long-term impact may be limited. For context, over the past year, Bitcoin’s Realized Cap has grown by $381.7 billion, dwarfing the Silk Road Bitcoin’s value of $6.5 billion.
How significant is the selling pressure from Silk Road Coins?
In the long-term; very little.
Over the last 365 days, the Realized Cap of Bitcoin increased by $381.7B, while the potential selling pressure from U.S. Government Silk Road coins is 'just' $6.5B. pic.twitter.com/YAV6V1v4pZ
— CryptoQuant.com (@cryptoquant_com) January 9, 2025
However, the more immediate concern lies in how the DOJ might sell Bitcoin. An over-the-counter (OTC) transaction could minimize market disruption, as it involves private deals rather than exchange-based trades.
In contrast, selling through exchanges would likely amplify price volatility, as evidenced by the German government’s sale of 50,000 BTC in mid-2024, which had a noticeable market impact.
Time for Bitcoin Accumulation?
Meanwhile, in a separate report, CryptoQuant analyst MAC_D highlighted the selloff trend among short-term holders, which has contributed to the ongoing price drop.
According to him, when short-term holders sell at a loss, it signals a shift toward accumulation by longer-term investors. As Bitcoin’s price declines, experienced market participants often step in to purchase discounted coins, potentially triggering a recovery push.
MAC_D highlighted several on-chain metrics that suggest that Bitcoin has not yet reached the peak of its current cycle. The short-term investor ratio, currently at 60%, also supports the idea that the market remains in an accumulation phase.
MAC_D argues that selling Bitcoin during this period may not be wise, as further declines could provide attractive entry points for savvy investors. The data suggests that the ongoing correction does not signify the end of Bitcoin’s broader upward cycle. Currently, Bitcoin trades for $94,582, up 1.43% in the last 24 hours.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
