How Bitcoin Prices Respond to Possible Sale from the U.S. Department of Justice

The US Department of Justice approved the sale of huge amounts of Bitcoin and was seized, causing bearish sentiment in the market. Analysts are concerned that a massive sell-off could lead to a downturn in the market.

The market is imminent?

Blockchain analysis platform Glassnode recently released a report to explore the potential impact of the US Department of Justice selling a large amount of Bitcoin on prices. The Justice Department reportedly has been approved to sell more than 69,000 bitcoins, worth more than $6 billion at current prices.

Glassnode mentioned in its report that the government had previously sold Bitcoin on a large scale, such as the German government selling 56,000 Bitcoins in July 2024. At that time, the market successfully absorbed the selling pressure, and the price of Bitcoin rose instead.

However, Glassnode also pointed out that a large-scale Bitcoin sell-off does not always lead to price increases. The institution uses two indicators of exchange net traffic and unrealized net profit and loss (NUPL) to predict the impact of the sell-off.

Source: Glassnode/X

Glassnode analyzed the market response when the 30-day Simple Moving Average (SMA) exchange net inflows reached approximately 70,000 BTC. For example, in March 2021, when the exchange net inflow reached 70,500 BTC, the NUPL was about 0.72 (indicating that market sentiment was in a greedy state), the market then experienced adjustments but eventually recovered.

In June 2022, the net inflow of 68,700 BTC and the NUPL of 0.21 (indicating that market sentiment is in a panic state) led to a year-long bear market, which is related to the LUNA collapse.

Based on the above analysis, the impact of the US Department of Justice’s sale depends on the current market conditions. As the current market sentiment (based on NUPL) is on the wait-and-see state, the market may be able to absorb the pressure from selling. But Glassnode also reminds that if optimism is insufficient, a large-scale Bitcoin sell-off may still lead to a price drop.

Bitcoin price trend

As of press time, the price of Bitcoin was about $94,700, up 2.4% in 24 hours. This suggests that Bitcoin price may be stabilizing and recovering after a week of decline. CoinGecko data shows that Bitcoin price has fallen nearly 4% in the past seven days.

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