The US government may crash the market!!

Guys, something terrible has happened!!!

According to Protos, the US Supreme Court refused to hear the appeal of Battle Born Investments and others regarding 69,370 bitcoins (worth $4.4 billion) related to the Silk Road. Protos said this means that these bitcoins may soon be auctioned.

Previously, the U.S. District Court for the Northern District of California ruled that the U.S. government was allowed to dispose of the confiscated bitcoins according to law. Battle Born Investments tried to obtain ownership of these bitcoins through appeal, but the Supreme Court's ruling made its request fail.

Since a lower court ordered the U.S. government to “dispose of the defendant’s property confiscated in accordance with law,” the U.S. Marshals or other agencies may soon receive court instructions to sell the bitcoins that were once stolen from Silk Road.

The US government holds more than 200,000 Bitcoins

According to the data I have found, the US government’s Bitcoin holdings are shocking, and the address currently holds 203,200 BTC, which is about $12 billion. This makes the government one of the largest Bitcoin holders in the world.

Currently, these bitcoins are mainly stored in encrypted, password-protected offline cold wallets controlled by the U.S. Department of Justice, the Internal Revenue Service or other agencies.

The main sources of Bitcoin seized by the U.S. government are as follows:

In November 2020, 69,369 BTC was seized from Silk Road, the largest black market on the dark web

January 2022, seized from Bitfinex hack – 94,643 BTC

In March 2022, 51,326 BTC was seized from Silk Road hacker James Zhong. The US government still holds 41,500 BTC of this amount.

In addition to Bitcoin, the U.S. government’s address also holds 50,200 ETH (about $130 million), 750.7 wBTC (about $44.41 million), and some other smaller tokens. The total value of these holdings is approximately $12.4 billion.

Impact on the market

At present, "government selling" has become one of the important factors affecting the price of Bitcoin. There are even signs that when a large Bitcoin whale such as a government sells a large amount of encrypted assets, it can also cause an earthquake in the encrypted market!

Since June this year, the German government has sold more than 50,000 bitcoins and made a profit of US$2.8 billion from the sale of bitcoins.

However, this behavior also caused the price of Bitcoin to fall in June. It fell 9.8% that month, from about $67,000 on June 1 to about $60,000 on June 30.

I think the government's sale of Bitcoin will also affect the behavior of market participants: the MT.GOX trustee announced that it will begin the repayment of Bitcoin, which may lead to a large-scale sale of Bitcoin on the market, thereby putting pressure on the market.

The amount of cryptocurrency stolen through hacks and cyber breaches more than doubled to $1.38 billion in the first half of this year, according to data from the Center for Economic Research.

Moreover, the regulatory policies on cryptocurrencies are still evolving around the world, and any new regulatory measures may have a profound impact on the Bitcoin market. The government's actions may increase market concerns about future regulatory policies.

It is also worth noting that recently some of the "Satoshi Nakamoto miners" who have been dormant for 14 years have liquidated and cashed out, making a profit of more than 1 million times. This reflects that the bitcoins held for a long time by some early Bitcoin miners may be gradually flowing into the market.

This massive selling by miners may mean that the selling pressure from the "sleeping" wallets of miners that previously supported the price of Bitcoin has reached a critical point. If more such liquidation events occur in the future, it will inevitably further increase the downward pressure on the entire market. However, the selling pressure is not expected to be too large, because most early miners may choose to hold for a long time rather than sell in large quantities.

In short, the government's sale of Bitcoin may lead to negative impacts such as a decline in market confidence, price drops, and reduced liquidity, increasing market instability.