Although the U.S inflation report came in positive, Bitcoin is struggling and cannot break through a particular level. The Consumer Price Index (CPI) went down for the first time in four years and this initially boosted the stock markets and raised hopes of a Federal Reserve interest rate cut.

Source: CoinMarketCap

High-risk assets, amongst which Bitcoin can be included, experienced only temporary relief. However, Bitcoin bulls failed to keep up with the move, with its price losing to $57,000 on Friday.

German Government’s Bitcoin Sales Intensify

The intensified sell-off of Bitcoin by the German government has created a huge market impact. The wallet that the government held contained about 50,000 BTC, seized from a film piracy website in January.

Those holdings had shrunk to less than 5,000 BTC by July 11 following a key transfer to exchanges such as Coinbase, Bitstamp, and Kraken.

Following the transfers, Germany’s Bitcoin reserves increased when part of the funds were returned, but later on, it decreased to 6,394 BTC. The liquidation has remained a process being pursued by the government as part of the management of digital currencies.

On Friday, July 12, another 3,450 BTC were sent to exchanges and addresses, thus reducing the German Bitcoin holdings.

Market Reaction and  Price Outlook

The market is exhibiting such behavior due to two main factors; the cumulative sales of Bitcoin and the possibility of the distribution of 95,000 BTC to Mt. Gox’s creditors. This, in effect, caused a reappearance of the Bitcoin price crash and has also been seen to fail to break through the $60,000 mark.

However, there are some signs that can be considered as positive for the further development of Bitcoin even under the selling pressure.

Concurrently, there’s been some promise for Bitcoin despite selling pressure. The daily MACD histogram shows momentum that will probably turn upward. Expectations of a Fed rate cut and potential support from FTX repayments offer further support against price declines.

Sentiment and Market Indicators

The Crypto Fear & Greed Index slipped into the “Extreme Fear” zone for the first time since January 2023. This came as a result of some bearish developments that have made the market very uncertain. The $60,000 price level has been highly resisted for Bitcoin, which in turn has created a lot of fear for the traders and investors.

However, some analysts and market participants remain rather optimistic although the current environment remains rather difficult. In a newsletter, FalconX, a crypto prime broker, said the medium and long-term bulls can draw comfort from the rising positivity towards crypto and possible rate cuts that enhance the risk assets.

FalconX also highlighted that the holders’ selling profiles are different between Mt. Gox creditors and the German government, where a more dispersed holder base reduces the probability of selling large amounts of coins.