Bitcoin is facing a particularly volatile week, with the possibility for a 10% move to push above $73,000 or fall towards $60,000, according to Alice Liu, research lead at CoinMarketCap.
The largest crypto(BTCUSD) fell for the second day on Tuesday, erasing its gains during the weekend after Republican presidential nominee Donald Trump last Saturday said he would build a strategic bitcoin reserve if he wins the U.S. presidential election in November.
Bitcoin declined 3.4% over the past 24 hours to around $65,921 on Tuesday, according to CoinDesk data. It is 10.7% lower from its all-time high at $73,798 hit in March, while up 57% so far this year.
Bitcoin's fall on Tuesday could mostly be attributed to concerns around the U.S. government's potential disposal of the bitcoins it seized, according to Alex Kuptsikevich, senior market analyst FxPro.
A wallet labeled as belonging to the U.S. government on Monday transferred around 29,800 bitcoins, which are worth around $2 billion based on the crypto's current price, to an unlabeled address, which then sent the bitcoins to two different addresses, according to data from crypto-intelligence firm Arkham Intelligence. The bitcoins were likely sent to an institutional custody service, analysts at Arkham wrote on X.
According to Arkham Intelligence, the U.S. government still holds about 203,000 bitcoins, worth about $13.4 billion, based on the crypto's current price. A concentrated sale of such holdings could lead to a significant selloff, Kuptsikevich wrote in a Tuesday note.
Crypto investors have also been hesitant to make directional bets before three central banks announce their interest-rate decisions later this week. The Bank of Japan and the Federal Reserve are due to announce their decisions on Wednesday, while the Bank of England is scheduled to release the decision on Thursday. The U.S. jobs report data is also due on Friday.
Financial markets expect the Bank of Japan to potentially raise the policy rate against its previous trend, while the Federal Reserve may signal a rate cut starting in September. The Bank of England is expected to cut its key interest rate for the first time in four years.
"These announcements could lead to the most intense 32 hours for the global market since the Covid era, likely resulting in increased volatility in crypto assets," CoinMarketCap's Liu said in emailed comments.
Meanwhile, there are both bullish and bearish cases for bitcoin, Liu noted. Optimism around the Trump speech at a bitcoin conference already peaked over the weekend, while there is no "new sauce of optimism in the market now," Liu said.
Still, it has been over 100 days since bitcoin went through the so-called halving, which is bullish for the crypto, noted Liu.
Halving is a mechanism written in the blockchain's algorithm, where the reward for bitcoin mining is cut in half, meaning miners will receive 50% less for verifying transactions. Halvings are scheduled to happen after every 210,000 blocks are mined, or about every four years, until the maximum supply of 21 million bitcoins is released. Based on historical data, bitcoin tended to see significant gains in the year after the first 100 days after halvings.