Bitcoin price dips below $30,000 amid bearish signals

Bitcoin's price dipped below $30,000 on Tuesday, with a confluence of factors affecting the performance of the digital asset. 

The price of the world's largest crypto currency fell 0.6% over the past day to $29,852 as of 2:13 p.m. in New York, according to CoinGecko.

While bulls are focusing on three key prospects for long-term holding and accumulation including the Bitcoin halving event, potential approval of spot bitcoin ETFs and speculation about a rate cut next year, one analyst believes downside pressure is being catalyzed by the possible sell-off of the U.S. government's seized bitcoin stash.

Will more Silk Road bitcoin be sold?

On July 12, the U.S. department of justice stirred speculation by appearing to transfer $300 million in BTC to new addresses in two transactions.

"I think that this price reduction is mostly driven by futures prices showing bearish signals, mostly driven by news the U.S. government is allegedly preparing to sell close to $300 million worth of bitcoin," independent digital asset analyst Konstantin Anissimov told The Block. "I believe the market is expecting this to happen very soon."

"The total daily volume traded in bitcoin is less than $2 billion right now," he added. "My assumption is some of this is wash trading. So, a sell-off of $300 million worth of bitcoin should and will result in a negative price movement."

However, the analyst expects any dip to be short-lived and followed by a price correction.

While bitcoin historically presents an inverse correlation with the U.S. Dollar Index, it has failed to appreciate in the wake of DXY's recent decline of around 2.3%. 

"The BTC-DXY relationship will be hard to shake for long, though," said Noelle Acheson, author of Crypto is Macro Now newsletter. "It's not just that the U.S. dollar is the denominator in the most-quoted pair for the crypto asset, and when the denominator goes down in value, the ratio goes up, all else being equal, it's also that a weaker dollar boosts global liquidity by giving U.S. dollar debt holders around the world more room to breathe."