In a surprising and significant move in the cryptocurrency market, the United States government has transferred a staggering total of 9,825 Bitcoins that had previously been seized from Silk Road. This unexpected action has left investors and analysts speculating about the possible impact on the price of Bitcoin, and has raised concerns among cryptocurrency holders about the possibility of an imminent market crash.
A million dollar Bitcoin transfer
Unverified reports indicate that approximately 9,800 BTC associated with Silk Road are being transferred in two transactions. This represents the largest amount of funds related to the defunct dark market moving in recent months. As of Wednesday morning, several transactions involving Silk Road-linked Bitcoins were pending confirmation. In total, 9,825 BTC, equivalent to $302.2 million, were expected to be sent from addresses associated with the Department of Justice (DOJ).
These addresses are sending the Bitcoins to other inactive addresses. Although the DOJ has previously reorganized its Silk Road holdings, it is still premature to conclude whether this is an immediate sale. However, in March, authorities directly transferred 9,800 BTC to the US-based platform Coinbase at a price of $21,800 per token, thus generating $215 million. At the time, officials stated that they had plans to sell an additional 41,500 BTC (valued at $1.27 billion), which had been seized from Silk Road hacker James Zhong, in four separate batches.
Sale and imminent fall?
The movement of such a large amount of Bitcoin, especially when related to such a well-known case as Silk Road, can have a significant impact on the market. The possible sale of these Bitcoins could increase the supply in the market, which, if not balanced by demand, could lead to a decrease in the price of Bitcoin. In November 2022, US authorities took possession of more than 50,000 Bitcoins belonging to an individual named James Zhong. Zhong had confessed to involvement in a bank fraud scheme involving hacking the same number of Bitcoins from the infamous Silk Road marketplace in 2012. Court documents associated with Zhong’s case, as well as those relating to Ross Ulbricht, the founder of Silk Road, provided information about the Bitcoin wallet addresses involved. This allowed blockchain analytics firms to track these specific addresses. For those who own Bitcoin, the decision to sell should not be taken lightly. While selling now could prevent a possible fall in price, it could also mean missing out on future gains if the market recovers or continues its uptrend. Since the government will be selling the Bitcoins in lots, this is likely not to have a significant impact or put much selling pressure on the Bitcoin price. Curiously, however, the US government appears to be selling Bitcoin on Coinbase, the very platform that the SEC considers an “unregistered securities exchange.”