Government Bitcoin Sell-Off Impact is Highly Overestimated

Investors and traders have been grappling with the intense selling pressure on Bitcoin triggered by recent sell-offs from Germany and the United States. 

This has caused the cryptocurrency to dip over 10% on weekly charts. However, reports suggest that the effects of these sell-offs are not as severe as the community perceives them to be. Ki Young Ju, a renowned crypto analyst and CEO of CryptoQuant, argues that the impact is grossly overestimated.

Government sell-offs are not a big deal

Ki Young Ju’s analysis shows that Bitcoin’s realized cap has steadily increased since the approval of spot Bitcoin ETFs. The Bitcoin seized by the governments of the US and Germany constitutes only a tiny portion of the overall realized cap. Despite recent large transfers causing market panic and triggering a bearish momentum, the uptick in realized cap remains largely unaffected.

Source: CryptoQuant

Young Ju said, “$224 billion has flowed into this market since 2023. Government-seized BTC contributes about $9 billion to the realized cap. It’s only 4% of the total cumulative realized value since 2023. Don’t let the government sell FUD and ruin your trades.”

Source: IntoTheBlock

Young Ju further explains that realized cap measures the total capital that has entered the market. Unlike the traditional market cap, which is based on the current price multiplied by the total number of coins, the realized cap considers the cost of each coin when it last moved. He describes this as the size of the “graveyard of exit liquidity victims,” which grows as profits are realized.

Bitcoin bull cycle expected to continue

In a separate post, Young Ju expresses his belief that the Bitcoin bull cycle will continue until early next year. He advises spot traders to dollar-cost average (DCA), knowing that prices could drop to $47,000. He cautions against opening high-leverage long or short positions based on his tweets unless the trader is experienced in futures trading. 

“Over the past month, I have indirectly warned against excessive risk, but some people are still opening high-leverage long positions based on my tweets about the long-term cycle. My tweets are from a spot trading and long-term cycle perspective. Warnings about corrections are mentions of risk,” Young Ju added.

Source: IntoTheBlock

On-chain data boosts Bitcoin’s outlook

On-chain data supports Young Ju’s optimistic view of Bitcoin. Despite the recent drop, 82% of Bitcoin holders are making money at the current price, as BTC remains up by over 90% year-to-date. However, 13% of holders are at a loss. Over the past seven days, transactions over $100,000 have seen over $86 billion in activity, indicating high-interest levels among institutional investors. Exchange inflows are slightly higher than outflows.

Exchange signals indicate a bullish sentiment with an intelligent price increase of 0.14% and a bid-ask volume imbalance of 7.44%. This suggests that buying demand is slightly more potent than the selling pressure on these exchanges, which could lead to a price recovery.

While government sell-offs have caused some market panic, the impact on Bitcoin’s realized cap and long-term outlook appears minimal. The increased realized cap and positive on-chain data reinforce a bullish sentiment for Bitcoin in the long run.

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