Key Points
- The US government has recently moved $1.92 billion in Bitcoin, primarily seized from the Silk Road operation, to new wallets.
- This has sparked speculation about potential future sales and their impact on the market.
The US government is making notable moves with its Bitcoin [BTC] holdings as Donald Trump’s administration prepares for its official transition on 20th January, 2025.
Recently, $1.92 billion worth of BTC was transferred into new wallets, with $963 million immediately sent to Coinbase, indicating potential future sales.
Concerns of Liquidation
This move is part of a wider trend where the U.S. government has shifted substantial Bitcoin assets, approximately $2.6 billion between July and August, suggesting preparations for liquidation.
This has led to speculation that President Joe Biden might be planning to offload the U.S. government’s BTC reserves before Trump’s inauguration, potentially undermining plans to establish a Bitcoin Reserve.
On 2nd December 2024, data from Arkham, an on-chain intelligence platform, revealed the movement of $1.92 billion worth of BTC into new wallets.
This transfer involved splitting the assets between two wallets, with one subsequently moving $963 million in Bitcoin to Coinbase, leading to further speculation about future sales and their potential impact on the market.
Potential Market Impact
The Bitcoin assets in question were seized from the infamous Silk Road, and since they are legally owned by the U.S. government, there are concerns that they could be sold off in large volumes, potentially causing a market downturn.
Such a sale could exert significant downward pressure on BTC’s price, causing unease among investors.
This fear materialized swiftly, as Bitcoin’s price, which had been nearing the $100k threshold, dropped to $95,229.66, reflecting a 0.20% decline in the last 24 hours.
However, despite concerns over the potential slowdown of the cryptocurrency market following Donald Trump’s inauguration, the crypto community remains cautiously optimistic.
Historical data suggests that market rallies often lose steam after presidential transitions, but the crypto space has shown resilience in the past.
For instance, when the U.S. government prepared to sell $600 million in Bitcoin four months ago, the market initially faltered but quickly rebounded as institutional investment surged.
Moreover, while the recent transfers of Bitcoin by the Biden administration have sparked speculation, they may not indicate imminent sales.
The U.S. Marshals Service, which has a secure custody agreement with Coinbase Prime, suggests that the assets were moved for safekeeping rather than immediate liquidation, with regulatory procedures still to be followed before any sale can occur.