The United States Department of Justice (DOJ) plans to sell approximately $6.5 billion in Bitcoin (BTC) that was confiscated from the Silk Road operation. This action is a result of a court decision made on December 30, marking the end of a lengthy legal dispute regarding ownership of these Bitcoins.
US gov’t could sell more BTC before Trump
According to information from data source Arkham Intelligence, by January 9th, the U.S. government held approximately 198,000 Bitcoins, which were equivalent to around $18.5 billion. This amount included about $6.5 billion that was part of the same reserves.
Certain experts are discussing the possibility that the departing Biden administration might choose to offload all their Bitcoin holdings, which some believe is a move influenced by politics in anticipation of Donald Trump’s return to the White House.
According to Jason Williams, a commentator for Fox Business, he contends that the Biden administration is directing the Department of Justice (DOJ) to sell vast quantities of Bitcoin while the market is experiencing a bull run. This action, as he suggests, is likely taken with the understanding that if the Trump administration returns, they may purchase it back at even higher prices.
Williams remarked, “This clearly distorts the trust the government is supposed to uphold.
“We’re selling Bitcoin for approximately $94,000. What price will Trump have to pay to buy them back? Higher.”
Can DOJ sell-off crash Bitcoin price?
After the ruling, the value of Bitcoin decreased by 2.78%. This decrease took place as the market expressed worries that a possible Bitcoin auction by the DOJ might further lower Bitcoin prices due to increased supply.
As a data analyst, I’ve observed that past U.S. government Bitcoin auctions haven’t significantly influenced Bitcoin’s long-term price trends.
Since March 2023 up until now, the US government’s Bitcoin holdings have decreased from 236,000 Bitcoins to 198,000 Bitcoins – a decrease of about 38,000 Bitcoins. This reduction is roughly equivalent to $3.54 billion at present Bitcoin prices.
Although there was a decline in its value, Bitcoin’s price increased an impressive 375% during that timeframe. This growth was driven primarily by robust demand for newly introduced spot Bitcoin exchange-traded funds (ETFs) and escalating optimism due to Trump’s election promise to incorporate Bitcoin into the strategic reserves of the United States.
The founders of Glassnode, specifically Jan Happel and Yann Allemann, explained the manner in which the U.S. administration manages Bitcoin transactions.
When Bitcoin is seized, the Department of Justice (DOJ) moves it to the U.S. Marshals Service. This agency handles the sale of the Bitcoin by organizing open-to-the-public auctions. It’s important to note that these sales don’t involve a direct transaction on cryptocurrency exchanges; instead, they are conducted independently.
As a crypto investor, I’ve learned that direct sales on exchanges can potentially overwhelm the market with an excessive amount of supply, leading to dramatic price decreases. On the other hand, auctions offer a more controlled and secure method, minimizing the risk of such sudden market floods.
US gov’t misses out on $17.9B in Bitcoin profits
The US government has already missed out on some large profits through its previous Bitcoin sales.
As an analyst, I’ve uncovered some fascinating insights regarding Bitcoin seizures and sales by the government over the years. Initially, they managed to auction off approximately 195,092 Bitcoins, which generated around $366.5 million in revenue. However, considering current market prices, the total value of those sold Bitcoins is estimated to be a staggering $18.25 billion.
In simpler terms, this statement implies that the government could have earned approximately $17.9 billion more if it hadn’t sold its assets prematurely. This underscores a substantial lost chance or opportunity, often referred to as “opportunity cost.
According to Ki Young Ju, the founder and CEO of CryptoQuant, approximately $1 billion in funds flowed into the cryptocurrency market every day last year, totaling around $379 billion based on realized capitalization.
“The US govt selling $6.5B could be absorbed in just a week. Do not panic.”
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2025-01-09 18:53