As the price of Bitcoin consolidates just below the all-time high of $99,540, a significant move by the U.S. government has raised concerns among investors. The government has transferred a large portion of its seized Bitcoin to Coinbase, potentially signaling an intention to sell. This echoes similar actions that affected the market earlier this year.
Transfer of U.S. Government Bitcoin
According to market research company Arkham, the U.S. government has transferred approximately 10,000 Bitcoin, worth about $1.92 billion at current market prices, to two separate wallets.
One wallet contains Bitcoin worth $969 million, while the other wallet holds approximately $949 million. This strategic allocation has drawn attention, especially considering the government's history of selling seized Bitcoin, which could create significant selling pressure in the market.
Data from cryptocurrency analytics firm Dune shows that the U.S. government currently holds 183,422 BTC, worth over $17.6 billion. This figure represents approximately 0.93% of the total Bitcoin supply.
If the government decides to sell part of this holding, it could put significant downward pressure on the price of Bitcoin, reminiscent of previous sell-offs after large transfers.
Will the government stop selling by 2025?
Historically, such actions have led to increased volatility. For example, NewsBTC reported in April, when the price of Bitcoin peaked at $73,700, the government transferred over 30,000 seized Bitcoin from the Silk Road market.
This incident follows the seizure of over 50,000 BTC from James Zhong, who allegedly earned this amount through illegal means related to Silk Road in 2012. Following these transfers, the price of Bitcoin experienced significant volatility and tended to decline in the following months.
In 2022, the government also sold 9,800 BTC, with plans to divest an additional 41,500 Bitcoin. This history raises concerns that the latest transfer could lead to similar outcomes, potentially jeopardizing Bitcoin's recent upward momentum. However, there are emerging hopes that such moves could be limited by 2025.
President-elect Donald Trump is expected to take office on January 20 and he has 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 BTC holdings, with plans to use these assets to help reduce the nation's $36 trillion national debt.
This proposal was introduced by U.S. Republican Senator Cynthia Lummis in Congress under the "Bitcoin Act," and has received bipartisan support. With the recent leadership change from the Democratic Party to the Republican Party securing a majority in the House of Representatives, there is optimism that this bill could take effect in Q2 or Q3 of 2025.
