US Government Transfers 40,000 Bitcoin, Will It Affect Price?
The Bitcoin price is under severe pressure due to fears of “sticky” inflation and yesterday’s ultra-hawkish comments from US Federal Reserve (Fed) Chairman Jerome Powell. At press time, BTC was trading just above $22,000 and continued to show no strength yet.
At this point, news comes that the US government is about to sell some of its seized Bitcoin. Blockchain security firm PeckShield first reported that addresses linked to the US government transferred 49,000 BTC worth $1.08 billion today, which was seized from the Silk Road hacker.
Of that total, 9,826 BTC worth $217 million were transferred to Coinbase and 39,175 BTC worth $867 million were transferred to two new addresses. On-chain data provider Glassnode confirmed this, adding that most (so far) appear to be internal transfers, but approximately 9,861 BTC were sent to a Coinbase cluster.
Glassnode also shared the chart below, which shows the estimated Bitcoin balance of the US government.
PeckShield also stated that around 51,351.9 BTC of Silk Road Crime Proceeds were seized by the US government in November 2021 and March 2022 and grouped into 2 addresses.
The seized Bitcoin from founder Ross Ulbricht’s legendary darknet platform “Silk Road” makes up a large portion of the US government’s holdings. While Ulbricht was sentenced to life in prison without parole in 2015, he was ordered to pay $183 million in restitution related to Silk Road’s total sales.
Before the marketplace was shut down, Silk Road experienced a hack where 69,370 BTC was stolen. The government seized these Bitcoins in November 2020, and Ulbricht relinquished all rights to the Bitcoins and used them to pay the damages.
Will the US Government Affect the Bitcoin Price?
A Bitcoin dump by the US government does not seem very likely according to current information. The 9,826 BTC presumably sent to Coinbase is too little to affect the price. The other funds being moved appear to be internal transfers.
Therefore, a warning about a dump is in no way appropriate. Also, it should be emphasized that the US government usually chooses another way to sell seized Bitcoin. Typically, the sale takes place through General Services Administration (GSA) auctions, where confiscated Bitcoins are auctioned off in lots to willing buyers without affecting the price.
At press time, the BTC price had to contend with the macroeconomic headwinds and was trading at $22,025. The $21,900 price level continues to serve as the key support for BTC.
Should the level break to the south, a new lower low will be in play. Of particular importance then is the price level around $21,600 to write a higher low and maintain the uptrend in the 1-day chart.
Featured image from Medium, chart from TradingView.com
