Bitcoin’s (BTC) price struggled to maintain gains on June 26th after news emerged of a potential upcoming sale by the United States government. The revelation sent shockwaves through the market, raising concerns about increased supply and downward pressure on the leading cryptocurrency.

Government Sell-Off Casts a Shadow

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD struggling to hold onto its previous day’s advances. The jitters began when it became public knowledge that coins from a wallet linked to the US government were being transferred to cryptocurrency exchange Coinbase. The total amount involved was estimated to be around $240 million worth of BTC (3,940 BTC).

Market Reaction Muted, But Bears Circle

Popular trader Skew observed two possible scenarios: either OTC desks would auction off the BTC to private clients, or an open market auction would see the coins sold gradually. Interestingly, Skew noted a relatively subdued market reaction despite the news. While some short positions were opened in anticipation of a supply influx, others opted to close out long positions, creating a cautious atmosphere.

Germany’s Prior Sale Raises Coordination Questions

The US government’s move mirrored a similar action taken by Germany the prior week, where 6,500 BTC were transferred from their wallet, with 900 BTC subsequently sold. This timing coincidence sparked speculation among market observers, with some, like crypto hedge fund manager Travis Kling, describing it as “interesting.” Crypto entrepreneur Vinny Lingham echoed this sentiment, questioning if the sell-offs were coordinated.

Whales May Have Frontrun the Government

William Clemente, co-founder of crypto research firm Reflexivity, suggested that the recent large-scale distribution by Bitcoin whales might have been influenced by their knowledge of the government’s plans. He speculated that these whales may have been “frontrunning” the selling headlines, potentially explaining the crypto market’s relative weakness compared to stocks.

Bitcoin ETFs End Losing Streak

A brighter spot emerged with a look at the latest US institutional flows. Data from sources like Farside Investors showed that June 25th ended with a modest increase for spot Bitcoin exchange-traded funds (ETFs), marking the first inflow since June 12th.

Large Options Expiry on June 28th Looms Large

With a significant Bitcoin options expiry of $9.25 billion approaching on June 28th, the market braces for potential volatility. The high stakes options expiry, coinciding with the end of the first half of 2024, has investors on edge, particularly considering recent weakness in the crypto market compared to traditional finance.

Analysts Weigh Bullish and Bearish Options

The two-month mark since the Bitcoin halving event has fueled bullish bets, with a significant portion (57%) placed at or above $70,000. However, the recent market slump has cast doubt on these bullish predictions, potentially rendering many call options worthless if the price remains near $61,500 on the expiry date.

Macroeconomic Data and Market Sentiment

Weak macroeconomic data in the US, potentially leading to more aggressive rate cuts and stimulus packages from the Federal Reserve, could benefit Bitcoin bulls. Conversely, a report by Charles Schwab comparing current market dynamics to 2021 has some analysts worried about a potential bear market on the horizon.

Options Open Interest Favors Bears

The current options open interest on Deribit, the leading platform for Bitcoin options, heavily favors bears. With a total open interest of $4.4 billion for call options compared to $2.25 billion for put options, a price below $65,000 at expiry would render a significant portion of call options useless.

Bitcoin Needs $64,000 to Avoid Bullish Bloodbath

To prevent a potential loss scenario exceeding $820 million on Deribit, Bitcoin bulls need to keep the price above $60,000 leading up to the June 28th expiry.

Long-Term Adoption: A Glimpse into the Future

Analyst Willy Woo offered a ray of hope with his prediction on X, suggesting that Bitcoin could eventually rival the US dollar based on its historical adoption curve. Woo believes widespread adoption, potentially reaching 25-40% of the global population by the 2030s, is necessary for Bitcoin to challenge the dollar’s dominance.