- The US government had about 1% of all BTC in circulation.
- Concerns arose about the consequences for Bitcoin if the government decided to liquidate its assets.
Despite the US government’s strict regulatory stance on Bitcoin [BTC]it remains one of the largest BTC holders in the world.
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US becomes largest HODLer
According to data from The Wall Street Journal, recent seizures have added approximately 200,000 Bitcoins, worth more than $5 billion, to the US government’s assets. These were mainly stored in hardware wallets managed by agencies such as the Treasury Department and the IRS.
This government-held BTC represents approximately 1% of all Bitcoins in circulation, raising concerns about the impact on the cryptocurrency’s price if these holdings are ultimately sold at the same time.
These assets were mainly the result of seizures in connection with criminal investigations.
Bitcoin’s decentralized nature made it attractive to criminals, especially in its early days, for activities such as money laundering, drug trafficking, and ransomware attacks.
A long list
To combat these illegal activities, the US government has tracked down criminals and seized their ill-gotten BTC. This approach allowed the government to accumulate significant amounts of Bitcoin without entering the open market.
The majority of these assets were the result of three major seizures.
The first occurred in 2020 when the US Attorney’s Office in California seized 69,370 Bitcoins from an individual known as “Individual
In February 2022, the Department of Justice seized 94,636 stolen Bitcoins from the Bitfinex exchange, arrested Ilya Lichtenstein and Heather Morgan for their involvement in the hack and charged them with conspiracy to commit money laundering.
Another major seizure occurred in November 2022 when the US Attorney’s Office in New York announced a seizure of cryptocurrency worth $3.3 billion from fraudster James Zhong, who had illegally obtained more than 50,000 Bitcoins from the Silk Road dark web -marketplace.
A history of liquidations
Typically, the US government liquidates seized BTC through public auctions conducted by the US Marshals Service. This allows them to divest from these assets safely and efficiently without causing significant disruption to the market.
Over the years, the US has held 11 auctions, selling a total of $366 million worth of BTC. In the most recent case, they sold over 9,800 BTC linked to the Silk Road at the end of March.
While the US government has a history of selling seized BTC, there have been minimal sales since April. Speculation arises that they may want to demand higher prices to maximize their financial profits.
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The prospect of a substantial sell-off by the US government could have a profound impact on Bitcoin’s price. It could potentially disrupt a future rally.
At the time of writing, Bitcoin was trading at $26,700, showing limited upside momentum despite increasing speculation around ETFs.
Source: Santiment
