To the outside world, Bitcoin (BTC) falling from $10,000 to $92,000 in a matter of days could signal the end of the bull run. A caveat to this could be that Bitcoin continues to consolidate below a key psychological threshold of $100,000.
Unconfirmed reports from DB News suggest that the Department of Justice (DOJ) has been given the authority to liquidate 69,370 BTC ($6.5 billion) seized from the Silk Road market.
The report comes just 11 days after President-elect Donald Trump’s inauguration. Trump has promised not to sell any of the 187,236 BTC still in the possession of the US government, according to data from Glassnode. Most of the tokens in the government’s possession come from Bitfinex and Silk Road seizures.
There are a few reasons why fears of a liquidation may be overblown: Reports of the 69,370 BTC liquidation seem like a lot, and if they are sold, they will most likely be sold in an orderly manner as they are asked to get the the best possible price. At the same time, the market already knew that this was a possibility, so it could have already adapted to market expectations.
Second, the market has absorbed more than 1 million bitcoins since September. This can be demonstrated by the declining holdings of long-term holders, which Glassnode defines as investors who have held bitcoins for more than 155 days. As a cohort, they now own 13.1 million BTC. However, since September, the price has gone from around $60,000 to over $100,000.
The last reason is that we have previous data on another government that sold a similar amount of bitcoins. The German government sold approximately 50,000 BTC from mid-June to mid-July 2023. The total value of the coins was around $3.5 billion back then, about half of the current value.
However, the market did indeed lead the sell-off and the price bottomed around July 7 at around $55,000 while the German government was still in possession of at least 25,000 BTC. Which shows that this amount of bitcoins does not dictate the market.
