On Wednesday, the crypto market experienced a wave of volatility as news broke that the US government had transferred a significant amount of Bitcoin seized from the infamous Silk Road marketplace to the Coinbase exchange.
Massive Silk Road Bitcoin Influx To Coinbase
According to on-chain data tracker Arkham, the US government recently moved 10,000 Bitcoin worth around $590 million from a known government wallet to a Coinbase Prime deposit address.
Notably, this transfer sparked a 3.3% dip in the Bitcoin price, which fell below the key $60,000 support level to trade at around $59,130 at the time of writing.
However, it’s important to note that the US government’s selection of Coinbase as the custodian for its seized digital assets may only sometimes lead to immediate selling.
As reported by Bitcoinist, Coinbase announced that the US Department of Justice’s asset forfeiture division, the US Marshal Service, had chosen Coinbase Prime to offer custody and advanced trading services for its “Class 1” digital assets.
This partnership is intended to streamline the custody, management, and disposal processes for cryptocurrency assets, allowing for diversification in the types of digital assets that can be handled and disposed of under the government’s forfeiture programs.
Ultimately, this may result in the exchange holding this large amount of BTC and not affect the Bitcoin price in the short term or contribute to selling pressure unless there is a shift from previous movements and the authorities decide to liquidate the tokens.
Critical Resistance Levels And Support Thresholds
In a recent analysis of the current Bitcoin price action, crypto analyst Daan Crypto Trades recently highlighted key levels to watch for a potential continuation of BTC’s recovery over the past seven days after falling towards $59,000 on August 5th.
The analyst first noted that Bitcoin is at a pivotal point where it needs to break above the 200-day exponential moving average (EMA) at $59,468 and the 200-day moving average (MA) at $62,274.
Daan Crypto Trades explains that these levels are key to catalyzing favorable medium-to-long-term dynamics in favor of the bulls. However, the cryptocurrency has struggled with this challenge and failed to consolidate above these levels last week.
In light of this scenario, the analyst has identified two significant resistance levels that the BTC price must uphold if a potential correction looms.
Daan Crypto Trades underscores the importance of vigilance around the $56,530 mark on the BTC/USDT daily chart, emphasizing its role as a critical floor crucial for preventing a downturn that could mirror the substantial 20% correction witnessed at the commencement of August.
Moreover, the analyst points to the $52,990 threshold as the subsequent support level to monitor should Bitcoin falter at the aforementioned mark, especially if selling pressure intensifies, exerting downward pressure on its price trajectory.
Featured image from DALL-E, chart from TradingView.com