The US government recently announced its plans to offload a significant portion of its Bitcoin (BTC) holdings, which has sparked concerns within the crypto community. This move has raised questions about the potential impact on the crypto market, as it could potentially add to the selling pressure that the market is already facing.
The Department of Justice (DOJ) has revealed its intention to dispose of over $130 million worth of Bitcoin. These crypto assets were seized as part of the government’s case against Joseph Farace, also known as the Xanaxman. Farace had ties to the Silk Road and pleaded guilty to manufacturing and distributing alprazolam on the dark web marketplace.
The Bitcoin confiscated from Farace is just a fraction of the over 69,369 BTC that the US government has recovered as proceeds from Silk Road. The DOJ specifically noted that it had seized almost 2875 BTC from Farace and Sean Bridges, as well as an additional 58.7 BTC from Farace alone.
The Potential Impact on Bitcoin’s Price
The planned sale of such a significant amount of Bitcoin is concerning because it could have a notable impact on the price of Bitcoin and the broader crypto market. This comes at a time when the market is already under significant selling pressure from whales such as Grayscale, Celsius, and FTX.
However, it should be noted that the sale by the government may not happen immediately. The DOJ’s notice also mentioned that any other person claiming an interest in the forfeited property has 60 days to come forward with their claims. This suggests that the sale may not occur until sometime in March, after the expiration of the 60-day period.
The recent outflows experienced by Grayscale’s GBTC indicate that the selling pressure in Bitcoin might soon cool off. Bloomberg analyst James Seyffart reported that the fund saw its largest outflow of $640 million on January 22. Since then, the outflows have been declining, with $515 million, $429 million, and $394 million flowing out on January 23, 24, and 25, respectively.
If this trend continues, it is expected that the investment fund will eventually stop bleeding, which will be beneficial for the crypto market. This means that Grayscale will likely reduce its offloading of large sums of Bitcoin on a daily basis.
Bitcoin’s Current Trading Price
As of now, Bitcoin is trading slightly above $40,000, showing an upward trend in the last 24 hours. However, it is important to note that the volatility of the crypto market can lead to rapid fluctuations in price.
The US government’s decision to sell off a significant portion of its Bitcoin holdings has raised concerns within the crypto community. The potential impact on Bitcoin’s price, coupled with the existing selling pressure from other entities, creates an uncertain market environment. However, the recent decline in outflows from Grayscale’s GBTC suggests that the selling pressure may soon ease off. Investors should continue to closely monitor the market and conduct thorough research before making any investment decisions.
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