Crypto Alpha Report - January 09, 2025
Happy Thursday, friends! There is a lot of fear and panic in the air today. Is the U.S. Government poised to sell $69,000 Bitcoin? Let’s dive into the facts and decide what side of the market is the right side to be on.
Last evening, information from Bitcoin Magazine began circulating that the Department of Justice had received court approval to sell approximately $6.5 billion worth of Bitcoin seized from the Silk Road.
They received this approval on December 30th, and we are now hearing this. Furthermore, there are claims that this Bitcoin has already “been sold” via a credit line brokered by Coinbase. There is speculation that this is one of the chief sources of the volatility and selling pressure we’ve seen thus far.
On the bear side, many are panicking, speculating that this much Bitcoin would obliterate order books and send Bitcoin plummeting to below $30,000 if dumped on the open market. We can safely rule out that scenario.
The US Government has sold Bitcoin multiple times in the past:
-2014: US Marshals auctioned Bitcoin seized from Silk Road. Tim Draper purchased 30,000 BTC at this time.
-2018: USG sells 500 BTC to Riot Blockchain.
-2021: USGSA auctioned off less than 1 BTC.
-2023: USG auctioned off 9,861 BTC to the tune of 215M.
-2024: Significant amounts of Bitcoin have been moved around in USG wallets in 2024, sparking rumors of potential sales. In April 2024, 30,000 BTC was moved, some going to Coinbase, but no official sales occurred.
As you can see, although the USG has a history of selling Bitcoin, they have never sold them on the open market. They have always auctioned them off and almost always to individuals who desire to hold them. This fringe idea of 69,000 being market-sold is ludicrous.
After some digging, I found the Bitcoin wallet in question. Despite rumors, the coins have NOT been moved to Coinbase.
blockchain.com/explorer/addresses/btc/bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6
The timing of this event is also sparking a lot of debate online over whether or not it is a political move, with the inauguration of a “Bitcoin” president eleven days away. At the 2024 Bitcoin Conference in Nashville, Trump vowed to move for the US Government to keep all of its Bitcoin and not sell any.
This sale was greenlit by a federal judge, as stated on December 30th, 2024, after a long and contentious legal battle over ownership rights with Battle Born Investments, with the DOJ citing Bitcoin’s volatility as the primary reason for the approval of the sale, wanting to liquidate assets before the value of the government’s holdings declined.
The middle-of-the-road thinking around the Strategic Bitcoin Reserve is that Trump would keep all of the USG's current Bitcoin and allocate that to the “reserve.” Of course, the more bullish advocates are expecting the USG to begin spot-buying Bitcoin.
Regardless, unless we see Trump roll entirely back on all of his crypto promises, he will likely move to undermine or reverse this sale. The current administration only has 11 days to finalize this sale, and for now, the Bitcoin remains in the Silk Road private wallet.
Crypto Market Update
Stablecoin Dominance
This metric has increased by +3.25% today. At our current primary resistance level of 6%, this has been where we’ve seen buyers step back into the market and defend risk-on positions. However, on the bear side, momentum crosses into the positive zone after a long reversal pattern. Although my gut doesn’t quite believe it, a dispassionate analysis reveals a likely growth in this metric, implying further downside for crypto assets.
Bitcoin + Stablecoin Dominance
An increase in this metric of 0.42% largely driven by the rise in Stablecoin Dominance, as highlighted above. Currently, altcoins are holding up relatively well to Bitcoin’s decline in price. Similarly concerning for altcoins, however, is that momentum is now pushing into the positive zone without this metric being overly extended.
Altcoin Price Performance Relative to Bitcoin
A decline in this metric of -1.01%. Despite Bitcoin’s bearishness, altcoins hold their value relatively well compared to previous examples of Bitcoin price declines. Although we can see from yesterday’s Hammer Candle that buyers stepped in significantly, this metric continues to slide down today.
Bitcoin
Bitcoin’s price has declined below its January lows without triggering significant liquidations. Despite being heavily oversold, Bitcoin’s price has yet to reverse its downward trend, creating the possibility of more short-term downside before rising in anticipation of the US CPI print next Wednesday.
Trends
5M: Bearish
30M: Bearish
1H: Bearish
4H: Bearish
D: Bullish
W: Bullish
Bitcoin remains in an overall Bearish trend. Currently trading below VWAP, Bitcoin must break above $92,100 to deviate from the 5M trend. LTF Momentum Oscillators continue to show Bullish Divergence. This is a buying opportunity, but not for a leveraged swing trade. Don’t underestimate the swings FUD can have, and I would like to survive a wick to $88,000 if it occurs.
Watch for Bitcoin to regain 30M momentum before longing.
Key Levels
Slightly different take today.
Looking at the 4H Volume Profile, I can see voids in liquidity directly at December’s low at ~$90,250 and slightly lower at ~$88,600. As Bitcoin is trading in a wedge consolidation pattern, I think we don’t need to be significantly concerned with a large-scale breakdown in January. This remains my position, so in the short-term, in the bear case, I want to be prepared for Bitcoin’s price to re-test December’s lows and potentially wick lower to fill that liquidity void.
Zooming out below that, to make the bear case, liquidity voids exist at ~$83,000 and ~$77,000, providing downside targets to my contrarian bears reading.
Strategy
It's a pretty classic trading setup here, guys. We’re at support. This is also a battleground zone, where having an edge is tough - unless you stick to the basics. It's a scary area to long, I know, but that’s the statistically best setup here.
If structuring a long, I would ensure it can survive a wick to $88,000 as highlighted above, and my profit target would be ~$95-$97,000.
If you’re more inclined to short here, I won’t criticize you; it’s your account. But make sure you have conviction and that your short can survive volatility.
I’ll stick to the classic maneuver here.
Last evening, information from Bitcoin Magazine began circulating that the Department of Justice had received court approval to sell approximately $6.5 billion worth of Bitcoin seized from the Silk Road.
They received this approval on December 30th, and we are now hearing this. Furthermore, there are claims that this Bitcoin has already “been sold” via a credit line brokered by Coinbase. There is speculation that this is one of the chief sources of the volatility and selling pressure we’ve seen thus far.
On the bear side, many are panicking, speculating that this much Bitcoin would obliterate order books and send Bitcoin plummeting to below $30,000 if dumped on the open market. We can safely rule out that scenario.
The US Government has sold Bitcoin multiple times in the past:
-2014: US Marshals auctioned Bitcoin seized from Silk Road. Tim Draper purchased 30,000 BTC at this time.
-2018: USG sells 500 BTC to Riot Blockchain.
-2021: USGSA auctioned off less than 1 BTC.
-2023: USG auctioned off 9,861 BTC to the tune of 215M.
-2024: Significant amounts of Bitcoin have been moved around in USG wallets in 2024, sparking rumors of potential sales. In April 2024, 30,000 BTC was moved, some going to Coinbase, but no official sales occurred.
As you can see, although the USG has a history of selling Bitcoin, they have never sold them on the open market. They have always auctioned them off and almost always to individuals who desire to hold them. This fringe idea of 69,000 being market-sold is ludicrous.
After some digging, I found the Bitcoin wallet in question. Despite rumors, the coins have NOT been moved to Coinbase.
blockchain.com/explorer/addresses/btc/bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6
The timing of this event is also sparking a lot of debate online over whether or not it is a political move, with the inauguration of a “Bitcoin” president eleven days away. At the 2024 Bitcoin Conference in Nashville, Trump vowed to move for the US Government to keep all of its Bitcoin and not sell any.
This sale was greenlit by a federal judge, as stated on December 30th, 2024, after a long and contentious legal battle over ownership rights with Battle Born Investments, with the DOJ citing Bitcoin’s volatility as the primary reason for the approval of the sale, wanting to liquidate assets before the value of the government’s holdings declined.
The middle-of-the-road thinking around the Strategic Bitcoin Reserve is that Trump would keep all of the USG's current Bitcoin and allocate that to the “reserve.” Of course, the more bullish advocates are expecting the USG to begin spot-buying Bitcoin.
Regardless, unless we see Trump roll entirely back on all of his crypto promises, he will likely move to undermine or reverse this sale. The current administration only has 11 days to finalize this sale, and for now, the Bitcoin remains in the Silk Road private wallet.
Crypto Market Update
Stablecoin Dominance
This metric has increased by +3.25% today. At our current primary resistance level of 6%, this has been where we’ve seen buyers step back into the market and defend risk-on positions. However, on the bear side, momentum crosses into the positive zone after a long reversal pattern. Although my gut doesn’t quite believe it, a dispassionate analysis reveals a likely growth in this metric, implying further downside for crypto assets.
Bitcoin + Stablecoin Dominance
An increase in this metric of 0.42% largely driven by the rise in Stablecoin Dominance, as highlighted above. Currently, altcoins are holding up relatively well to Bitcoin’s decline in price. Similarly concerning for altcoins, however, is that momentum is now pushing into the positive zone without this metric being overly extended.
Altcoin Price Performance Relative to Bitcoin
A decline in this metric of -1.01%. Despite Bitcoin’s bearishness, altcoins hold their value relatively well compared to previous examples of Bitcoin price declines. Although we can see from yesterday’s Hammer Candle that buyers stepped in significantly, this metric continues to slide down today.
Bitcoin
Bitcoin’s price has declined below its January lows without triggering significant liquidations. Despite being heavily oversold, Bitcoin’s price has yet to reverse its downward trend, creating the possibility of more short-term downside before rising in anticipation of the US CPI print next Wednesday.
Trends
5M: Bearish
30M: Bearish
1H: Bearish
4H: Bearish
D: Bullish
W: Bullish
Bitcoin remains in an overall Bearish trend. Currently trading below VWAP, Bitcoin must break above $92,100 to deviate from the 5M trend. LTF Momentum Oscillators continue to show Bullish Divergence. This is a buying opportunity, but not for a leveraged swing trade. Don’t underestimate the swings FUD can have, and I would like to survive a wick to $88,000 if it occurs.
Watch for Bitcoin to regain 30M momentum before longing.
Key Levels
Slightly different take today.
Looking at the 4H Volume Profile, I can see voids in liquidity directly at December’s low at ~$90,250 and slightly lower at ~$88,600. As Bitcoin is trading in a wedge consolidation pattern, I think we don’t need to be significantly concerned with a large-scale breakdown in January. This remains my position, so in the short-term, in the bear case, I want to be prepared for Bitcoin’s price to re-test December’s lows and potentially wick lower to fill that liquidity void.
Zooming out below that, to make the bear case, liquidity voids exist at ~$83,000 and ~$77,000, providing downside targets to my contrarian bears reading.
Strategy
It's a pretty classic trading setup here, guys. We’re at support. This is also a battleground zone, where having an edge is tough - unless you stick to the basics. It's a scary area to long, I know, but that’s the statistically best setup here.
If structuring a long, I would ensure it can survive a wick to $88,000 as highlighted above, and my profit target would be ~$95-$97,000.
If you’re more inclined to short here, I won’t criticize you; it’s your account. But make sure you have conviction and that your short can survive volatility.
I’ll stick to the classic maneuver here.
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