U.Today's drop was indeed unexpected, but things may turn out better than expected thanks to the fact that institutions are not selling it at bargain prices, and there is a silver lining that you shouldn't miss if you think the asset is falling fast.
Even before the US government started selling BTC, spot traders had already been selling their holdings. As traders anticipate an increase in supply, this influx of Bitcoin into the market usually triggers a sell-off.
As expected under the circumstances, the initial market response has been sustained selling pressure. The market reaction to this news was relatively calm. Some shorts have been opened in anticipation of supply coming to the market shortly. On the other hand, the closing of long positions has been the main activity.
This suggests that while there is some bearish sentiment, many traders are not actively shorting the market; instead, they are simply pulling back. The fact that institutions are not aggressively selling Bitcoin is notable even despite the existing pressure.
This moderation by major holders could prove beneficial. The market may stabilise sooner than expected if institutional selling does not overwhelm it. Institutions are responding cautiously and persistent selling pressure in spot markets points to an uncertain period ahead.
But Bitcoin could avoid a more serious decline if it manages to hold important support levels. The US government and other major holders will have a significant influence on how the Bitcoin price moves in the near future.
Overall, the possibility of a reversal is present, but some major entries are still required, which have not happened yet.
This article was originally published on U.Today.
