Bitcoin saw a sharp drop to around $66,300 on July 29 after the US government transferred $2 billion worth of seized bitcoin (BTC) to the Silk Road marketplace.
Arkham Intelligence revealed that a US government wallet transferred 29,800 BTC to a unknown address with no previous transaction history on July 29.
The address then sent 19,800 BTC and 10,000 BTC to two different addresses. The unexpected move has raised concerns among investors about a possible sell-off.
Arkham analysts speculated that the transfer of 10,000 BTC, worth about $670 million, was likely a deposit with an institutional custodian or service provider.
Historically, such significant moves often precede asset sales, causing market jitters. This time was no different, as Bitcoin’s value fell almost 5% from the session high of $70,000 to a low of $66,360 – a decline of 1.6% in the past 24 hours.
The flagship crypto has since recovered some of the losses and was trading at $67,350 at the time of writing, based on CryptoSlate data.
Two days after Trump’s keynote
The timing of this transfer is particularly notable as it comes just two days after former President Donald Trump – the Republican candidate for the 2024 presidential election – announced his plan to create a “strategic national Bitcoin stockpile” if he is chosen.
At the Bitcoin 2024 conference in Nashville, Trump promised that the government would keep “100%” of the 210,000 Bitcoin it already holds, increasing market sensitivity to the government’s actions.
The speech and subsequent announcement by Senator Cynthia Lummis of legislation seeking to do the same sparked a rally over the weekend, culminating in Bitcoin reaching $70,000 before the drop.
The US Department of Justice has not yet responded to requests for comment on whether the transferred Bitcoin is intended for sale. However, the US Marshals Service (USMS) recently awarded Coinbase Prime a contract to manage and dispose of its large-cap cryptocurrency, suggesting the transfer may not signal an imminent sale.
Community response
The crypto community was quick to react, with most criticizing the timing of the move.
Galaxy Digital CEO Mike Novogratz said:
“Tone deaf anyone??? Moving Silk Road BTC two days after Trump’s promise not to move them is just stupid!!!!”
Similarly, Digibuild CEO Robert Salvador said the Biden-Harris regime is “dumping Bitcoin” two days after Trump’s speech to “hurt the price and investors.”
Adding to the speculation, Dennis Porter, co-founder of Satoshi Action Fund, said:
“I can’t officially confirm it, but I have heard that there is now an internal government battle over who in the government will own Bitcoin. Days after we heard this, $2,000,000,000 worth of BTC was transferred to a new wallet.”
On the other hand, venture capitalist Adam Cochran urged calm, noting that such transfers between wallets and custodians are routine and do not necessarily indicate a sale. He said:
“You panic when big coins move.”
This incident mirrors previous market reactions to major government moves of Bitcoin. Last month, news that the German government was moving Bitcoin to crypto exchanges caused a temporary price drop. The country has cleared its entire supply of nearly 50,000 BTC in just a few weeks.
The Silk Road, an online black market used mainly for illegal drug transactions, was shut down by authorities in 2014 and the associated Bitcoin has been regularly moved by US authorities since then.
Bitcoin Market Data
At the time of printing 20:17 UTC on July 29, 2024Bitcoin is number 1 in terms of market capitalization and so is its price down 1.24% in the last 24 hours. Bitcoin has a market capitalization of $1.33 trillion with a 24-hour trading volume of $38.75 billion. Learn more about Bitcoin ›
Summary of the crypto market
At the time of printing 20:17 UTC on July 29, 2024the total crypto market is valued at € $2.41 trillion with a 24-hour volume of $79.35 billion. Bitcoin’s dominance currently stands at 55.17%. Learn more about the crypto market ›