The US government’s proposed $118M sale of Bitcoin is ‘peanuts’ compared to GBTC.
The US government's plan to sell nearly $118 million worth of Silk Road bitcoin (BTC) seized should not be taken as a cause for concern, market analysts said.
A guilty plea circulated on social media on Jan. 10 shows the government plans to forfeit 2,934 BTC following the Jan. 8 sentencing of Silk Road Xanax dealer Ryan Phares and his 72-year-old father. Joseph Phares for conspiracy to defraud.
While some community members expressed concern that the auction could lead to millions of dollars in Bitcoin “waste”, Steven Lubka, managing director of bitcoin exchange Swan Bitcoin, was among many who argued that the sale was “peanuts” compared to peanuts. He exited the Greyscale Bitcoin Trust last week.
“Peanuts, we were eating 4x GBTC sales for breakfast,” Lubka said.
GBTC has sold 106,575 BTC worth $4.2 billion since its reversal on January 11.
Peanut, we were eating 4x GBTC sales for breakfast https://t.co/OHM2Lb1Fcf
— Steven Lubka ☀️ (@DzambhalaHODL) January 25, 2024
The US government's planned sale is only 1.5% of the estimated 194,188 BTC, or $7.7 billion, from the three seizures it made in criminal cases, according to data from crypto firm 21.co. This is, in total, still less than 1% of Bitcoin's distribution supply.
The top three Bitcoin exchanges and sales by the US government are:
94,643 BTC seized from 2016 Bitfinex hack in January 2022. 69,369 BTC seized from Silk Road in November 2020. 51,326 BTC seized from Silk Road hacker James Zhong.
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It was set to drop 41,000 BTC in four sales in 2023.
The US government is known to sometimes auction off Bitcoin, most notably in 2014 when venture capitalist Tim Draper bought nearly 30,000 BTC at an auction.
More recently, the government has moved to sell held crypto on exchanges instead of auctions, with the last known sale of 9,118 BTC in March 2023.
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