The US government recently announced its plans to offload a significant portion of its Bitcoin (BTC) holdings, and this revelation has sparked concerns within the crypto community. The Department of Justice (DOJ) has given notice of its intent to dispose of over $130 million worth of Bitcoin. These crypto assets were part of what had been forfeited to the government in its case against Joseph Farace. It’s important to note that this move could potentially add significant selling pressure to the already struggling crypto market.
According to the DOJ, they had seized nearly 2875 BTC from Farace and Sean Bridges, with an additional 58.7 BTC confiscated from Farace alone. Farace, also known as the Xanaxman, had ties to the Silk Road and pleaded guilty to manufacturing and distributing alprazolam on the dark web marketplace. The Bitcoin seized from him is just a fraction of the over 69,369 BTC that the US government is believed to have recovered as proceeds from the Silk Road.
Potential Impact on Bitcoin’s Price and the Crypto Market
The sale of such a significant amount of Bitcoin raises concerns about its potential impact on the price of Bitcoin and the broader crypto market. The market is already under significant selling pressure from whales such as Grayscale, Celsius, and FTX. Combining the government’s planned sale with the existing selling pressure could exacerbate the downward trend in crypto prices.
However, it’s worth noting that the proposed sale might not happen anytime soon. The DOJ’s notice also stated that any person other than the defendant who claims an interest in the forfeited property has 60 days to come forward with their claims. Therefore, it is likely that the sale will be postponed until the expiration of the 60-day period, which occurs sometime in March.
Signs of Relief: Cooling Off the Selling Pressure
Recent daily outflows of Grayscale’s GBTC suggest that the selling pressure on Bitcoin might soon cool off. After Bloomberg analyst James Seyffart reported that the fund saw $640 million flow out on January 22, its highest outflow yet, there has been a gradual decline in outflows. GBTC has seen outflows of $515 million, $429 million, and $394 million on January 23, 24, and 25, respectively. If this trend continues, the investment fund is expected to stabilize and potentially stop bleeding soon. This would be positive news for the crypto market, as Grayscale would decrease its offloading of large amounts of Bitcoin on a daily basis.
Currently, Bitcoin is trading just above $40,000, showing a slight increase in the past 24 hours according to data from CoinMarketCap.
The US government’s plans to sell a significant portion of its Bitcoin holdings have raised concerns within the crypto community. This move, combined with existing selling pressure from other market participants, could heavily impact Bitcoin’s price and the broader crypto market. However, it is important to note that this proposed sale might be postponed until March due to the 60-day period for claimants to come forward. Moreover, recent signs of relief, such as the decreasing outflows from Grayscale’s GBTC, suggest that the selling pressure on Bitcoin might soon cool off. Investors and traders will closely monitor these developments to assess the market’s response and its potential implications for the future.
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