Bitcoin experienced a sharp decline to roughly $66,300 on July 29 after the US government transferred $2 billion worth of seized bitcoin (BTC) tied to the Silk Road marketplace.
Arkham Intelligence revealed that a US government-owned wallet transferred 29,800 BTC to an unidentified address with no prior transaction history on July 29.
The address subsequently sent 19,800 BTC and 10,000 BTC to two different addresses. The unexpected move has triggered concerns among investors about a potential sell-off.
Arkham analysts speculated that the 10,000 BTC transfer, valued at approximately $670 million, was likely a deposit to an institutional custody or service provider.
Historically, such significant movements often precede asset sales, causing market jitters. This time was no different, as Bitcoin’s value dropped nearly 5% from its session high of $70,000 to hit a low of $66,360 — a 1.6% decline over the past 24 hours.
The flagship crypto has since recovered some of the losses and was trading at $67,350 as of press time, based on CryptoSlate data.
Two days after Trump keynote
The timing of this transfer is particularly notable as it comes just two days after former President Donald Trump — the Republican candidate for the 2024 presidential election — announced his plan to establish a “strategic national Bitcoin stockpile” if elected.
At the Bitcoin 2024 conference in Nashville, Trump promised that the government would “keep 100%” of the 210.000 Bitcoin it already holds, heightening market sensitivity to the government’s actions.
The speech and Senator Cynthia Lummis’ subsequent announcement of legislation aiming to do the same sparked a rally over the weekend, which culminated in Bitcoin hitting $70,000 before the slide.
The US Department of Justice has not yet responded to requests for comment on whether the transferred Bitcoin is intended for sale. However, the US Marshals Service (USMS) recently awarded Coinbase Prime a contract to manage and dispose of its large-cap crypto, suggesting the transfer might not signal an imminent sale.
Community reaction
The crypto community reacted swiftly, with most criticizing the timing of the move.
Galaxy Digital CEO Mike Novogratz said:
“Tone deaf anyone??? Moving Silk Road BTC two days after Trump’s pledge to not move them is just dumb!!!!”
Similarly, Digibuild CEO Robert Salvador said the Biden-Harris regime is “dumping Bitcoin” two days after Trump’s speech to “hurt the price and investors.”
Adding to the speculation, Satoshi Action Fund co-founder Dennis Porter said:
“I cannot officially confirm but I had heard word that there is now an internal government struggle over who in the government will hold the Bitcoin. Days after hearing this, $2,000,000,000 in BTC was transferred to a new wallet.”
On the other hand, venture capitalist Adam Cochran urged calm, noting that such transfers between wallets and custodians are routine and do not necessarily indicate a sale. He said:
“You guys freak out any time large coins move.”
This incident mirrors past market reactions to large government movements of Bitcoin. Last month, news of the German government moving Bitcoin to crypto exchanges caused a temporary price drop. The country offloaded the entirety of its almost 50,000 BTC stash in the span of a few weeks.
The Silk Road, an online black market primarily used for illegal drug transactions, was shut down by authorities in 2014, and the associated Bitcoin has been moved by US authorities periodically since then.
Bitcoin Market Data
At the time of press 8:17 pm UTC on Jul. 29, 2024, Bitcoin is ranked #1 by market cap and the price is down 1.24% over the past 24 hours. Bitcoin has a market capitalization of $1.33 trillion with a 24-hour trading volume of $38.75 billion. Learn more about Bitcoin ›
Crypto Market Summary
At the time of press 8:17 pm UTC on Jul. 29, 2024, the total crypto market is valued at at $2.41 trillion with a 24-hour volume of $79.35 billion. Bitcoin dominance is currently at 55.17%. Learn more about the crypto market ›