40,000 BTC! The US government transfers huge amounts of Bitcoin - the cause of the crash?

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Bitcoin is under severe pressure amid new inflation concerns and comments from Federal Reserve Chairman Jerome Powell yesterday. At press time, BTC is trading just above $22,000 and has no strength.

Now this too: Analysis shows that the US government is in the process of selling some of its confiscated bitcoins. Blockchain security firm PeckShield reports that addresses related to the US government transferred 49,000 BTC worth $1.08 billion today. The coins are from Silk Road.

#PeckShieldAlert 49k $BTC (worth $1 Billion) from a purse related to US Government law enforcement seizures to be transferred to #coinbase (~9.8k $BTCworth $217M), bc1qf2…fsv (30k $BTC) & bc1qe7…rdg (9k $BTC) #SilkRoad pic.twitter.com/4MzlvDzkut
— PeckShieldAlert (@PeckShieldAlert) March 8, 2023

Of this, 9,826 BTC worth $217 million were transferred to Coinbase and 39,175 BTC worth $867 million to two new addresses. On-chain data provider Glassnode confirms the process, adding that while most of the transfers (so far) appear to be internal transfers, 9,861 BTC were also sent to the Coinbase cluster.

Glassnode shares the chart below showing the US government’s estimated Bitcoin supply.

Bitcoins confiscated by the US government | Source: Twitter @Glassnode

PeckShield also says: The US government seized approximately 51,351 BTC of Silk Road Crime Proceeds in November 2021 and March 2022 and bundled them into 2 shipments.

The Bitcoin confiscated from the legendary platform Darknet “Silk Road” founder Ross Ulbricht consists of a large part of the holdings of the US government. Ulbricht was sentenced to life in prison without parole in 2015, along with $183 million in damages for the entire sale of Silk Road.

However, before the deal stopped, Silk Road was hit by a hack that stole 69,370 BTC. The government confiscated these bitcoins in November 2020 – and Ulbricht renounced all rights to them and used them to pay compensation.

Does the US government influence the price of Bitcoin?

Based on the current state of knowledge, the dumping of Bitcoin by the US government does not seem impossible, but not likely. The 9,826 BTC believed to have been sent to Coinbase is not enough to influence the price. The other cash movements appear to be purely internal transfers.

So there is no reason to worry about an accident. Also, it should be emphasized that the US government usually chooses another way to sell confiscated bitcoin. Typically, sales are made through General Services Administration (GSA) auctions, where confiscated bitcoins are auctioned in lots to willing buyers – without influencing the price.

At press time, BTC price is facing macro headwinds, trading at $22,100. The $21,900 price level continues to be a key support for BTC.

If this level breaks south, a new low would be in play. It is therefore of particular importance that the price level around $21,600 is to create a higher low and maintain the uptrend on the 1-day chart.

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Text credit: Newsbtc

Last updated on March 8, 2023