US Approved to Sell $6.5B in Bitcoin – Will BTC Price Crash?
The United States Department of Justice (DOJ) is set to auction off $6.5 billion worth of Bitcoin (BTC) seized from the Silk Road. The decision follows a court ruling on December 30, ending a protracted legal battle over the ownership of BTC.
US government may sell more BTC before Trump.
As of January 9, the US government was holding 198,000 BTC, worth about $18.5 billion, according to information source Arkham Intelligence. $6.5 billion is part of this reserve.
History of US Government Bitcoin Balance. Source: Arkham Intelligence
Some analysts have speculated that the incumbent Joe Biden administration may be politically motivated to sell all government-held bitcoin ahead of Donald Trump's presidency.
Fox Business contributor Jason Williams says the Biden administration is ordering the DOJ to dump thousands of bitcoins during a bull market, fully aware that the incoming Trump administration could buy it at a higher price.
Williams added: “This is a clear betrayal of the government's integrity.”
“We are selling bitcoin at approximately $94,000. What price will Trump have to pay to get them back? Higher.
Could DOJ Selling Bitcoin Price Crash?
After the decision, the price of Bitcoin fell by 2.78%. The decline comes amid market concerns that the DOJ's potential Bitcoin auction could put further downward pressure on the price of BTC.
BTC/USD Daily Price Chart. Source: TradingView
However, history shows that US government Bitcoin auctions have had little lasting impact on the price of BTC.
For example, between March 2023 and now, the U.S. government's holdings of Bitcoin have decreased from 236,000 BTC to 198,000 BTC — a decrease of approximately 38,000 BTC, or about $3.54 billion at current prices.
Despite this selloff, Bitcoin's price has risen 375% over the same period, fueled by increased interest in newly launched bitcoin exchange-traded funds (ETFs) and Trump's election promise to include bitcoin in America's strategic reserves.
Related: Bitcoin whales add 34K BTC since December: analyst
Glassnode co-founders Jan Happel and Yann Allemann explain how the US government handles Bitcoin sales.
He pointed out that the DOJ will hand over the Bitcoin to the US Marshals Service once it is deregistered. These auctions are transparent and do not involve selling Bitcoin directly on a cryptocurrency exchange.
Direct inflation floods the market with supply, but auctions mitigate this risk.
US government loses $17.9B in Bitcoin profits.
The U.S. government has already lost some big profits on its previous bitcoin sales.
From these auctions, approximately $366.5 million was generated and the government took and sold approximately 195,092 BTC. However, at current prices, the total value of the bitcoins sold would be an estimated $18.25 billion.
US-government-held BTC sales tracker. Source: Jlopp.github
That means the government missed out on nearly $17.9 billion in profits, highlighting the high opportunity cost of liquidating the holdings early.
“Last year, $379 billion entered the market based on real value,” said Ki Young Joo, founder and CEO of Information Platform.
The US government's $6.5 billion sale could be taken in just one week. Don't panic.”
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
