To the outside world, Bitcoin’s (BTC) fall from $10,000 to $92,000 in a matter of days could signal the end of the bull run. One caveat to this could be that Bitcoin continues to consolidate below a key psychological threshold of $100,000.
Unconfirmed reports from DB News suggest that the Department of Justice (DOJ) has been given the authority to liquidate 69,370 BTC ($6.5 billion) seized from the Silk Road market.
The report comes just 11 days after President-elect Donald Trump’s inauguration. Trump has pledged not to sell any of the 187,236 BTC still in the US government’s possession, according to Glassnode data. The majority of tokens in government possession come from seizures on Bitfinex and Silk Road.
There are several reasons why fears of a massive sell-off may be overblown: Reports of 69,370 BTC being liquidated seem like a lot, and if they are sold, they will most likely be done in an orderly manner as they is requested to obtain the best possible price. At the same time, the market already knew this was a possibility, so it could have already been priced into market expectations.
Second, the market has absorbed over a million bitcoins since September. This can be demonstrated by the decreasing holdings of long-term holders, who are defined by Glassnode as investors who have held bitcoin for more than 155 days. As a cohort, they now hold 13.1 million BTC. However, since September the price has increased from around $60,000 to over $100,000.
The final reason is that we have previous data on another government selling a similar amount of Bitcoin. The German government sold around 50,000 BTC between mid-June and mid-July 2023. The total value of the coins then was around $3.5 billion, or around half of their current value.
However, the market effectively dominated the sales and the price bottomed around July 7 at around $55,000 while the German government still held at least 25,000 BTC. Which shows that this amount of Bitcoin does not dictate the market.
