The crypto market faces tension as fears grow over the potential impact of a $6.5 billion bitcoin sale by the U.S Department of Justice (DoJ). This comes after a U.S court approved the sale of 69,370 bitcoins seized from the infamous Silk Road darknet marketplace, marking another milestone in a long-running legal saga.
The court’s decision follows a year-long ownership battle between the DoJ and Battle Born Investments, a firm claiming rights to the bitcoins via a bankruptcy estate. However, the investment group’s inability to identify the individual who surrendered the Bitcoin ultimately tipped the scales in favor of the DoJ.
Citing bitcoin’s volatility, the DoJ successfully argued for a swift sale of the stash to prevent potential value fluctuations. This motion was granted on December 30, setting the stage for what could be one of the largest Bitcoin liquidations ever by a government.
Will there be a sell-off?
The news has sent ripples through the crypto market. Bitcoin has already faced a -3.06% decline over the past week, with its price currently hovering around $93,530, according to CoinGecko. Investors fear that flooding the market with $6.5 billion worth of bitcoins could drive prices even lower.
However, some industry experts have attempted to calm nerves. CryptoQuant CEO Ki Young Ju pointed out that last year’s market handled $379 billion in liquidity, suggesting the market could absorb the sale within a week without major disruption. Yet, the uncertainty remains palpable, as traders closely monitor the government’s wallet activity via blockchain analytics platforms like Arkham Intelligence.
The road ahead may not be a silky one
Adding a political dimension to the sale, it is set to occur just two weeks before President-elect Donald Trump’s inauguration on January 20, 2025. Trump has openly criticized the government’s practice of selling confiscated bitcoins, favoring a long-term hold strategy to maximize returns.
This raises an intriguing question: what happens if the sale isn’t completed before Trump takes office? Some believe his administration may block the sale, which could stabilize the market and shift investor sentiment.
Read Also: What is next for bitcoin after the $100,000 mark?
Currently, the U.S. government holds a significant number of bitcoins—203,239 in total—with 69,370 bitcoins earmarked for the imminent sale. If the sale goes through, the government will retain 133,369 bitcoins still valued at over $130 billion at current prices.
The crypto market is under pressure, with Bitcoin’s Relative Strength Index (RSI) at a low 35.3, indicating oversold conditions. Bitcoin faces support at $90,000 level, further exacerbating concerns about a broader market correction.
Read Also: Governments with the biggest bitcoins in the world
How the German State of Saxony also sold bitcoins last July
The timing of the U.S. government’s proposed bitcoin sale has also drawn comparisons to Saxony’s move to offload its own bitcoin holdings. In July, the state government of Saxony in Germany sold 50,000 BTC for $2.88 billion, averaging $57,600 per bitcoin. The sale was part of a plan to liquidate bitcoins seized from the now-defunct piracy site, Movie2K. However, the decision proved costly.
Just four months later, bitcoin price surged to a new all-time high following Donald Trump’s victory in the U.S. presidential election, including a record $10,000 single-day increase on November 11. The same bitcoin sold by Germany would now be worth $4.5 billion—a 56% increase.
If the U.S. follows through with its plan to sell 69,370 bitcoins before Trump’s inauguration, it could face a similar missed opportunity.
Read Also: How Mt. Gox’s Bitcoin Transfer Could Impact the Cryptocurrency Market
Read Also: UK to pass stablecoin legislation as Trump promises to lessen digital assets regulation
With just days left before Trump’s inauguration, the crypto market is bracing for a turbulent month. Traders fear a potential domino effect that could discourage further investments in bitcoin and other riskier assets if the DoJ goes on with the sale. On the flip side, if the sale is delayed or blocked under Trump’s administration, the market could experience relief and regain some stability. The outcome of this development will likely set the tone for bitcoin’s performance in the early months of 2025.
Read more: Bitcoin may hit $200,000 in 2025—Bitwise
Victor Solomon is a crypto analyst at Crypto Asset Buyer (CAB). Over the years, Victor has gained valuable expertise in market analysis, risk management, and community management within the cryptocurrency ecosystem. The founder of Soluvic Crypto Hub, a crypto community where he equips newbies in the space, Victor’s mission is to empower individuals to uncover opportunities and safely navigate risks in the blockchain industry. Victor’s academic foundation includes a BSc. (Ed) in Mathematics, a credential that underpins his strong analytical and problem-solving abilities. Currently, he is expanding his technical expertise as a Software Development student at Brigham Young University. He is an Ex African Manager of Newscrypto..
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