Just ten days after the U.S. government pledged to provide $6 billion in military aid to Ukraine, the Department of Justice was prepared to initiate the liquidation of a massive Bitcoin asset.
On January 9, an official confirmed to DB News that the Department of Justice has been authorized to dispose of the 69,370 Bitcoins seized in connection with the infamous Silk Road case. This asset currently has a market value of approximately $6.5 billion.
It is reported that the Department of Justice requested permission to sell these assets due to Bitcoin price fluctuations. When asked about the next steps, a DOJ spokesperson stated, 'The government will take the next steps based on the ruling of the case.'
After the news broke, Bitcoin fell over 2.5% within 24 hours, and at the time of writing, the price was $94,400.
This is not the first time the U.S. government has sold Bitcoin.
Since 2014, the U.S. government has conducted multiple auctions of Bitcoins seized from the Silk Road case, and it is worth reviewing the timeline and its impact on market prices.
June 2014: The U.S. government held its first public auction of Bitcoin seized from Silk Road. The U.S. Marshals Service auctioned approximately 30,000 Bitcoins. Bidders included many investment institutions and individuals, with well-known investor Tim Draper winning multiple times. In subsequent auctions, the government sold the remaining Bitcoins in batches.
After the auction, the price of Bitcoin remained stable around $600 without experiencing a 'collapse'. The auction process demonstrated active bidding by institutional investors, thus somewhat strengthening the 'legitimacy' attribute of Bitcoin.
December 2014: An auction of 50,000 Bitcoins, nearly double the size of the first auction, led to similarly pessimistic market expectations. However, after the auction concluded, Bitcoin continued to fluctuate between $300 and $400 without experiencing consecutive drops.
March 2015: 50,000 Bitcoins were auctioned, at which point Bitcoin had already rebounded from its previous lows. The previous panic in the market further weakened, and after slight fluctuations between $280 and $300, the price quickly stabilized.
November 2015: The U.S. government's cumulative auction of hundreds of thousands of Bitcoins by the end of the year did not trigger significant market turmoil. On the contrary, due to continuous bidding from buyers, these auctions were interpreted as a symbol of Bitcoin gradually gaining more 'legitimate investment' status.
To this day, the U.S. Department of Justice has been authorized to liquidate the remaining 69,370 BTC (valued at approximately $6.5 billion) seized in the Silk Road case, which has been dormant for over four years at the Silk Road wallet address 'bc1qa5'.
Based on past sale history, Bitcoin prices may experience short-term panic, but in the long run, due to the U.S. government's past practice of OTC auctions, it is unlikely to sell at market price, and the negative impact on Bitcoin prices will not last long.
