Bitcoin saw a significant drop to around $66,300 on July 29 following the US government’s transfer of $2 billion worth of seized bitcoin (BTC) linked to the Silk Road marketplace.
Arkham Intelligence reported that a US government-owned wallet sent 29,800 BTC to an unidentified address with no previous transaction history on July 29.
Subsequently, the address transferred 19,800 BTC and 10,000 BTC to two different addresses, sparking concerns among investors about a potential sell-off.
Arkham analysts speculated that the 10,000 BTC transfer, equivalent to around $670 million, was likely a deposit to an institutional custody or service provider.
Such significant movements have historically preceded asset sales, causing market volatility. This time was no different, as Bitcoin’s value dropped by 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 leading cryptocurrency has since recovered some of the losses and was trading at $67,350 at the time of publication, according to CryptoSlate data.
Two days after Trump keynote
The timing of this transfer is particularly noteworthy as it occurred just two days after former President Donald Trump — the Republican candidate for the 2024 presidential election — announced his intention to establish a “strategic national Bitcoin stockpile” if elected.
During the Bitcoin 2024 conference in Nashville, Trump pledged that the government would “keep 100%” of the 210,000 Bitcoin it currently holds, increasing market sensitivity to government actions.
Trump’s speech and Senator Cynthia Lummis’ subsequent announcement of legislation with a similar aim led to a rally over the weekend, culminating in Bitcoin reaching $70,000 before the decline.
The US Department of Justice has not yet commented on whether the transferred Bitcoin is intended for sale. However, the US Marshals Service (USMS) recently awarded a contract to Coinbase Prime to manage and dispose of its large-cap crypto, suggesting that the transfer may not indicate an imminent sale.
Community reaction
The crypto community reacted swiftly, with many criticizing the timing of the transfer.
Galaxy Digital CEO Mike Novogratz remarked:
“Tone deaf anyone??? Moving Silk Road BTC two days after Trump’s pledge not to move them is just dumb!!!!”
Similarly, Digibuild CEO Robert Salvador stated that the Biden-Harris administration 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 commented:
“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 reflects past market reactions to significant government movements of Bitcoin. Last month, news of the German government transferring Bitcoin to crypto exchanges caused a temporary price drop. The country sold its almost 50,000 BTC stash within 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 periodically moved by US authorities since then.
Bitcoin Market Data
At the time of publication 8:17 pm UTC on Jul. 29, 2024, Bitcoin is ranked #1 by market cap, with the price down 1.24% over the past 24 hours. Bitcoin has a market capitalization of $1.33 trillion and a 24-hour trading volume of $38.75 billion. Learn more about Bitcoin ›
Crypto Market Summary
At the time of publication 8:17 pm UTC on Jul. 29, 2024, the total crypto market is valued 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 ›
