Listen to my analysis of this pullback—you can’t go wrong! This wasn’t caused by the U.S. government selling coins and dumping them!!
This recent Bitcoin pullback is a normal, liquidity-driven retracement, not the result of the U.S. government dumping coins. Over two days, approximately 9,261 BTC were transferred to a deposit address used by the U.S. government at Coinbase Prime. Nearly half came from funds recovered in the Bitfinex hack case; some were known Binance-related seizures; and another approximately 2,456 BTC had not previously been labeled as government-controlled, but followed the same route and can provisionally be classified as a new law-enforcement seizure. A transfer to a custodial address only shows that the coins entered a deposit account—it does not mean they have been sold. About 70% of the funds in the related addresses remain subject to return or forfeiture proceedings, so there isn’t enough evidence to treat this as proof of a government sell-off.
The main reason for the correction is tightening dollar liquidity. After reserves fell, liquidity remained tight throughout October, and dollar liquidity typically has the greatest impact on Bitcoin. USDC issuance peaked around September 27. Of the approximately $3.6 billion issued earlier, about $2 billion was later withdrawn—meaning more than half of the newly issued stablecoins were taken out of circulation. On top of that, the regulatory good news from mid-to-late September was quickly priced in. After a fairly substantial rally, there was already demand for short-term profit-taking; rumors about the government transferring coins simply amplified market sentiment.
I still expect the broader trend to be upward by year-end, but October as a whole will see a correction. Liquidity is more likely to hit its annual low in late October, and a secondary low in the second half or toward the end of the month may offer a relatively better window to watch for opportunities.
$BTC $ETH
This recent Bitcoin pullback is a normal, liquidity-driven retracement, not the result of the U.S. government dumping coins. Over two days, approximately 9,261 BTC were transferred to a deposit address used by the U.S. government at Coinbase Prime. Nearly half came from funds recovered in the Bitfinex hack case; some were known Binance-related seizures; and another approximately 2,456 BTC had not previously been labeled as government-controlled, but followed the same route and can provisionally be classified as a new law-enforcement seizure. A transfer to a custodial address only shows that the coins entered a deposit account—it does not mean they have been sold. About 70% of the funds in the related addresses remain subject to return or forfeiture proceedings, so there isn’t enough evidence to treat this as proof of a government sell-off.
The main reason for the correction is tightening dollar liquidity. After reserves fell, liquidity remained tight throughout October, and dollar liquidity typically has the greatest impact on Bitcoin. USDC issuance peaked around September 27. Of the approximately $3.6 billion issued earlier, about $2 billion was later withdrawn—meaning more than half of the newly issued stablecoins were taken out of circulation. On top of that, the regulatory good news from mid-to-late September was quickly priced in. After a fairly substantial rally, there was already demand for short-term profit-taking; rumors about the government transferring coins simply amplified market sentiment.
I still expect the broader trend to be upward by year-end, but October as a whole will see a correction. Liquidity is more likely to hit its annual low in late October, and a secondary low in the second half or toward the end of the month may offer a relatively better window to watch for opportunities.
$BTC $ETH