Bitcoin May See More Price Decline As Silk Road BTC Moves To Coinbase
Bitcoin once again crashed below the $22,000 price level after a particularly slow start to the week. This falls in line with the earlier bearish trend that was triggered after the digital asset rejected at the $25,000 resistance. However, this does not seem to be the end of the pain for crypto investors as some moves could point to a further price decline in the market .
BTC seized by US authorities moves to Coinbase
In the early hours of Wednesday, it was revealed that the US government had begun moving some significant amounts of bitcoin that were seized from various criminal parties. There was around 40,000 BTC in total moved by the US government, which was flagged by chain data aggregator Glassnode, to be internal transactions. However, more than 20% of the fund was moved to the centralized cryptocurrency exchange, Coinbase.
The report from Glassnode indicated that 9,861 BTC were sent to the exchange, all of which were seized from the infamous Silk Road hacker. The value of these coins at the time of writing came out to approximately $21.7 million at current prices. But in total, the value of the 40,000 BTC moved was valued at around $1 billion at the time.
About 40k $BTC from wallets linked to US government law enforcement seizures are on the move.
Of these, the majority appear to be internal transfers (so far), although approx. 9,861 $BTC seized from the Silk Road hacker has been sent to our Coinbase cluster. pic.twitter.com/afuEYcV18L
— glassnode (@glassnode) March 7, 2023
Interestingly, some of these coins are almost a decade old after the Silk Road market was removed, and some of the coins were subsequently sold at auction. Given that these coins have not moved for a long time, it has sparked speculation as to why they are moving now and why they are being sent to the Coinbase cluster identified by Glassnode.
What this could mean for the Bitcoin price
Now, when coins are moved to centralized exchanges, it is usually to sell, as investors take advantage of the deeper liquidity these CEXs offer. However, this cannot be the only reason why such large amounts of BTC were moved to the trading platform.
Another service that Coinbase offers is a custody service that helps large and institutional investors protect their coins. So there is also the possibility that the coins will be moved to Coinbase’s custodial services for safekeeping.
BTC price holding above $22,000 | Source: BTCUSD on TradingView.com
However, if the former is the case, the market will definitely feel the effects of such large amounts of BTC being dumped on the market. Along with the fact that Mt. Gox BTC is expected to be on the move as well, such high levels of selling pressure could easily push the price of bitcoin below $20,000.
Nevertheless, the price of the digital asset is still holding above $22,000, which is good for now, but it is trading below its 20-day moving average. This points to a reluctance for investors to enter the digital asset, at least in the short term. Thus, there is not enough buying pressure to soak up the possible influx of offers into the market.
