Bitcoin whipsawed as Washington delivered a split message that jolted sentiment: the US will add no new Bitcoin purchases to a strategic reserve—but will also stop selling seized coins. The headline hit triggered a swift slide below $120,000 to $117,955, before traders began to reassess what amounts to a removal of a major supply overhang without adding fresh state demand.

What Happened

US Treasury Secretary Scott Bessent said the government won’t buy more Bitcoin for its strategic reserve but will hold and continue building it from seized assets, ending prior auctions. Estimated holdings range from $15–$20B, while one on-chain estimate pegs US BTC at up to 198,022 BTC (> $24B).

The move coincided with stronger-than-expected PPI data, reviving inflation concerns and tighter policy fears. BTC fell to $117,955 and the broader crypto market dropped nearly 3%, with total market cap briefly under $4T.

Why It Matters for Traders

- Supply dynamics: Halting government BTC auctions removes a recurring sell pressure source, a medium-term positive for market structure. - Demand optics: No new government buys mean no fresh state bid—reducing the probability of a policy-driven melt-up. - Macro overlay: Hotter PPI raises real-rate worries, historically a headwind for risk assets, including BTC. - Narrative tug-of-war: Long-term demand still underpinned by concerns around US debt (> $37T), but near-term flows are macro-driven.

Key Levels and Scenarios

- Support: $118k (intraday pivot). If it fails, watch $115k–$114k and $111k as liquidity pockets. - Resistance: $123k–$125k (supply zone); above that, $128k. - Momentum: A daily close back above $121.5k would neutralize the headline selloff. Failure to reclaim risks a grind toward $115k.

Actionable Playbook (Short Term)

• Plan A: Fade panic, respect levels. Stagger bids near $118k and $115k with tight invalidation below $114k. Target $123k–$125k.
• Hedge volatility. For long exposure, consider short-dated protective puts or collars into CPI/Fed speakers to buffer macro shocks.
• Trade the range. If $118k holds, look for mean reversion toward $121.5k–$123k. If it breaks, pivot to momentum shorts toward $115k with stops above $119k.
• Watch basis and funding. Rising funding with flat price = crowded longs; negative funding into support often precedes bounces.
• On-chain flows. Monitor known US government wallet tags; confirmation of zero outbound transfers reinforces the “no-sell” narrative.

Risk Factors to Monitor

• Macro data beats. Further upside surprises in inflation or growth can pressure BTC via yields and USD strength.
• Policy nuance. Any shift from “no buying, no selling” to resumed auctions would reintroduce supply risk.
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• Liquidity pockets.
• Thin weekend books can exaggerate moves; size positions accordingly.
• Cross-asset signals. DXY above recent highs and a steeper yield curve typically dampen BTC rallies.

The Bottom Line

Net effect: lower structural sell pressure but no incremental state demand, set against a choppy macro backdrop. That favors range trading with disciplined risk, using policy headlines as catalysts rather than convictions. Keep a flexible bias: respect $118k; adapt quickly on a daily close above $121.5k or below $114k.

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