As bitcoin prices consolidate below the historic high of $99,540, the U.S. government's significant actions have raised concerns among investors. The government has transferred a large amount of seized bitcoin assets to Coinbase, which may indicate an intention to sell. This is similar to earlier actions this year that impacted the market.
U.S. Government Bitcoin Transfers
According to market intelligence firm Arkham, the U.S. government transferred approximately 10,000 bitcoins (valued at about $1.92 billion at current market prices) to two separate wallets.
One of the wallets holds bitcoins worth $969 million, while the other contains bitcoins valued at approximately $949 million. This strategic allocation has raised eyebrows, especially considering the government's previous sales of seized bitcoins, which could exert significant selling pressure on the market.
Data from the crypto analytics firm Dune shows that the U.S. government currently holds 183,422 bitcoins, valued at over $17.6 billion. This accounts for approximately 0.93% of the total bitcoin supply.
If the government decides to sell some of its assets, it could exert tremendous downward pressure on bitcoin's price, reminiscent of the sell-off that followed previous large-scale transfers.
Will government sales stop in 2025?
Historically, such actions have led to increased volatility. For example, NewsBTC reported that in April of this year, when the bitcoin price peaked at $73,700, the government transferred over 30,000 bitcoins seized from the Silk Road market.
Previously, James Zhong was suspected of illegally acquiring over 50,000 bitcoins (BTC) in 2012 through means related to the Silk Road. Following these transfers, the price of bitcoin experienced significant volatility and a downward trend in the subsequent months.
In 2022, the government also sold 9,800 bitcoins and plans to sell another 41,500 bitcoins. This history has raised concerns that the latest transfers may lead to similar outcomes, potentially jeopardizing bitcoin's recent upward momentum. However, there is hope that such actions may be curtailed in 2025.
President-elect Donald Trump is expected to be inaugurated on January 20, and he proposed a strategy that includes making bitcoin a strategic reserve asset for the United States.
This approach would involve the government purchasing nearly 1 million BTC instead of selling its current holdings of BTC, and planning to use these assets to help reduce the country’s $36 trillion national debt.
This proposal was introduced in Congress by U.S. Republican Senator Cynthia Lummis under the 'Bitcoin Bill' and has garnered bipartisan support. With the recent shift in leadership from the Democratic Party to the Republican Party and ensuring a majority in the House, there is optimism that the bill may take effect in the second or third quarter of 2025.
At the time of writing, BTC is trading at $96,000, having dropped 0.7% in the past 24 hours.