Why Did Bitcoin Price Drop After U.S. Government Moved $240M Silk Road BTC?
Could Government Sell-Offs Crash the Crypto Market?
In January 2024, approximately 4,000 Bitcoin were seized from narcotics trafficker Banmeet Singh during his trial.
Bitcoin Price Fluctuation
On Wednesday, Bitcoin (BTC) fell back towards $60,000 after a significant transaction by a U.S. Government-linked wallet. The wallet transferred around $240 million worth of seized Bitcoin to a Coinbase Prime address. This movement sparked concerns among traders about a potential sell-off of the digital assets.
Details of the Seized Bitcoin
The wallet moved 3,940 Bitcoin originally seized from a Silk Road vendor, according to Arkham Intelligence. This Bitcoin had been confiscated from Banmeet Singh and forfeited during his January 2024 trial.
Fear of Government Sell-Off
Recent weeks have seen increased anxiety among market players due to rumors of government sell-offs impacting the Bitcoin market. For instance, the German government was speculated to be selling its Bitcoin holdings, worth around $2.76 billion.
On June 26, 2024, the German government transferred 345 Bitcoin to a wallet labeled “Flow Traders.”
U.S. Government Bitcoin Holdings
The U.S. government holds a significant amount of Bitcoin acquired through seizures and asset forfeitures. Currently, it owns about 214,000 Bitcoin, valued at roughly $13 million.
Investor Concerns
Investor concerns about a potential Bitcoin price drop have been heightened by selling pressure from the Mt. Gox bankruptcy estate. The estate is liquidating 140,000 Bitcoin to compensate victims of the 2014 Mt. Gox collapse. Despite exchange balances being at a 6-year low, the market remains anxious.
Recent Government Movements
The last major movement by the U.S. Government was in late 2022, when it seized about 50,000 Bitcoin related to the Silk Road website. On April 2, 2023, it moved $2 billion worth of Bitcoin, pressuring digital markets. The last confirmed sale by the government was in March 2023, when it sold 9,861 coins for $216 million.
Market Impact
Source :Coinpediamarkets
After a modest recovery from its Mt. Gox-related decline earlier this week, Bitcoin fell below $61,000 following news of the government transfer. It has since edged back to $61,100, down 1% over the past 24 hours. Ether (ETH) also fell on the news, dropping 1.6% on the day.
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