Huge sell-off operations are about to hit the Bitcoin market. Analysis

Massive Sell-Off Operations Poised to Impact the Bitcoin Market... Here's the Reason!

Huge sell-off operations are about to hit the Bitcoin market. Analysis
 Huge sell-off operations are about to hit the Bitcoin market.

Kiaraash Hosseinbour, the founder of 'Colorways Ventures,' a private equity fund specializing in cryptocurrency investments, has issued a cautionary note regarding a potential upheaval in the Bitcoin market. He suggests that several influential Bitcoin holders might unleash significant selling pressures in the market during the first half of 2024.

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Why is Bitcoin selling off?

Hosseinbour draws attention to the Grayscale Bitcoin Trust (GBTC), which has experienced a reduction in holdings from 621,000 bitcoins to just under 580,000 bitcoins since the launch of its exchange-traded fund. The fund's high annual fees of 1.5%, compared to other providers like Bitwise (0.2%) and BlackRock (0.25%), are currently triggering widespread selling operations, potentially contributing to the ongoing downward trend in the market.

According to the expert's assessment, there seems to be no resolution in the near term, with ongoing selling pressures estimated at around 281,045 bitcoins, roughly equivalent to 12 billion dollars.

A major factor contributing to potential selling pressure is the long-anticipated distribution from the infamous Mt.Gox, set to release 138,000 bitcoins (valued at $5.8 billion) to creditors in 2024 after years of bankruptcy proceedings. This distribution, expected before the third quarter, could lead to a significant sale of bitcoins, either for cash or direct distribution to creditors.

Additionally, the bankruptcy proceedings of Celsius and FTX companies contribute to potential selling operations. About 38,000 bitcoins ($1.6 billion) from Celsius and approximately 20,500 bitcoins ($850 million) from FTX are poised for liquidation and expected distribution in the first half of 2024.

Crypto's decline looks more like a sell-off than a correction

Estimates indicate that Bitcoin miners, especially in the United States, own around 32,000 bitcoins ($1.35 billion), accumulated before the subsequent Bitcoin halving event in mid-April. It is anticipated that a portion of these holdings will be sold in 2024. However, this figure only represents publicly disclosed numbers from American miners, with the actual holdings of global mining entities likely to be much larger.

Huge sell-off operations are about to hit the Bitcoin market. Analysis
Why is Bitcoin dropping now?

Furthermore, the U.S. government's strategy in Bitcoin seizures plays a crucial role in these expectations. Between 2020 and 2022, authorities seized 207,189 bitcoins from various cases. While only a small portion of these bitcoins has been sold, the U.S. government regularly sells them in batches.

Is Bitcoin expected to drop

Last year, U.S. attorneys announced their intention to sell the remaining 41,491 bitcoins from Silk Road cases in four installments. However, only one batch was processed when the U.S. Department of Justice sent 8,200 bitcoins ($252 million at the time) to Coinbit in July. Whether further sales have occurred remains uncertain.

In total, the Bitcoin holdings of the entities mentioned exceed 716,000 bitcoins. Even if not all these holdings are sold this year, which is unlikely, especially with the U.S. government involved, there is likely to be significant selling pressure that the market will need to absorb.

Should I keep my crypto or sell?

Hosseinbour also emphasized that while these potential selling operations represent a substantial increase in Bitcoin supply in the market, the impact may be mitigated through different timelines and strategies for each seller.

In conclusion, a diverse range of selling pressures has affected the Bitcoin market. It's important to note that each seller operates on their own timeline, and the events do not unfold all at once, significantly reducing the overall impact.

As of the time of publishing this report, Bitcoin is trading at $40,434, reflecting a 2.6% decline in the last 24 hours.

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