Over the past three days, Bitcoin (BTC) has already accumulated losses of more than 7% after failing to stay above US$ 100 thousand. And part of this movement occurred because of the United States government, which dumped 69,370 BTC into the market.
Based on the cryptocurrency's current price, the US made $6.7 billion from the operation. This sale had been speculated since October last year, but only now has the Department of Justice (DOJ) authorized the government to sell the BTC, which was seized from the famous Silk Road website.
The sell-off has led investors to question whether the price of BTC can continue to fall and reach below $90,000. The price reached US$93,500 this Thursday morning (09), a drop of 2.6% in the last 24 hours.
Bitcoin Liquidation
As previously reported by X DB News, the DOJ has approved the sale of the 69,370 Bitcoins seized from Silk Road. Hours after the reports, the balance in the US government wallet, which had exactly the authorized amount, dropped to zero.
According to data from Arkham Intelligence, the sale took place on Wednesday (08).
Interestingly, the sell-off comes just 10 days before Donald Trump takes office at the White House on January 20. And one of the new administration's promises was to create a strategic reserve with up to 1 million BTC.
However, the Biden administration has made the decision to liquidate the BTC that the US already held. With this sale, the US could lose its lead to China in the list of countries with the largest amount of hoarded BTC. Today, the difference between the two countries is less than 15,000: the US has 207,000 BTC, while China has about 194,000.
The DOJ’s decision, issued on December 30, comes after the resolution of a long-running ownership dispute with Battle Born Investments. The company claimed that the BTC it sold was its own and not Silk Road’s and filed a dispute with the US government over ownership of the cryptocurrencies.
AdvertisementAfter the DOJ authorized the sale, Battle Born's legal team strongly criticized the decision, with its attorney characterizing it as "another blatant example of the DOJ's abuse of the civilian asset forfeiture process." They argue that the government employed "procedural tricks to ensure that the facts are never heard."
Could Bitcoin Drop Below $90,000?
After the rejection at the $100K level, Bitcoin price is facing strong selling pressure and has erased all weekly gains. At the time of writing, BTC price is trading down 2.47% at $93,915, with a market cap of $1.86 trillion.
Furthermore, BTC price is not showing strength in the derivatives market as Bitcoin funding rates have dropped considerably.
“In Bitcoin’s recent rally, funding rates showed a sharp increase in the middle of the uptrend, suggesting a delayed influx of demand. However, after Bitcoin faced rejection at the $108K resistance, funding rates dropped significantly,” said CryptoQuant analyst ShayanBTC.
On the other hand, short-term traders are selling BTC even at a loss, in what appears to be a panic sell-off ahead. According to on-chain data, short-term holders moved 23,200 BTC to exchanges recently, and all of them were at a loss.
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