While most people expected Bitcoin to soar after getting a thumbs-up from the federal government, the digital currency did something unexpected—it dropped like a rock. The immediate reaction caught many investors off guard, with sell orders flooding the market and prices swinging wildly.
Bitcoin’s counterintuitive plunge following federal approval left investors scrambling as sell orders overwhelmed markets in unexpected fashion.
But here’s the twist: selling Bitcoin now might be like trading a winning lottery ticket for pocket change.
The sudden price drop isn’t as scary as it looks. When big news hits crypto markets, volatility often jumps by double digits within hours. Market makers and computer trading programs see federal endorsement as a signal to make big moves, which can push prices down temporarily.
Many short-term holders also rush to cash out when they hear about institutional buyers coming in. It’s like everyone trying to exit a theater at once—things get messy fast.
Adding fuel to the fire, stop-loss orders trigger automatically when prices fall, creating a domino effect that deepens the selloff.
Meanwhile, smaller exchanges see their order books thin out during rapid exits, making each Bitcoin sold have a bigger impact on price. Think of it like a small pond versus an ocean—the same stone makes much bigger waves.
But here’s where selling becomes risky. Federal endorsement isn’t just news—it’s a game changer. When the government talks about a Strategic Bitcoin Reserve, they’re essentially promising to become a massive, long-term buyer.
Legislative proposals suggest the Treasury could purchase hundreds of thousands of Bitcoin over several years, removing them from the market permanently. The US government already holds over 207,000 Bitcoin valued at approximately $17 billion from previous asset seizures.
History shows that when central banks start accumulating an asset, prices tend to climb considerably. Selling before this accumulation begins is like leaving a concert before the headliner performs.
The opportunity cost could be enormous, especially since taxes, fees, and slippage eat into proceeds from large sales. Unlike stablecoins that maintain steady values, Bitcoin’s volatile nature can create significant price swings that penalize premature exits.
The regulatory landscape is also shifting favorably. Executive orders treating crypto as a national priority typically lead to easier rules for banks and asset managers. The Trump administration established a six-month deadline for an interdepartmental working group to propose comprehensive digital asset policies.
This opens new pathways for institutional money to flow into Bitcoin, creating structural demand that could dwarf temporary selling pressure from nervous individual investors.
