The recent announcement of the US government’s plans to offload a significant portion of its Bitcoin (BTC) holdings has sparked concerns within the crypto community. The move is seen as potentially adding more selling pressure to an already fragile crypto market.
The Department of Justice (DOJ) has indicated its intention to dispose of over $130 million worth of Bitcoin, which were seized as part of the case against Joseph Farace. Farace, also known as the Xanaxman, had links to the Silk Road and pleaded guilty to manufacturing and distributing alprazolam on the dark web marketplace. The Bitcoin confiscated from him constitutes a portion of the over 69,369 BTC believed to have been recovered as proceeds from Silk Road.
Selling Pressure and Market Impact
The sale of such a significant amount of Bitcoin raises concerns about its potential impact on the price and overall market sentiment. This announcement comes at a time when the market is already facing substantial selling pressure from prominent players like Grayscale, Celsius, and FTX.
It is important to note that the proposed sale by the government may not happen immediately. The DOJ’s notice states that any other party claiming an interest in the forfeited Bitcoin has 60 days to come forward with their claims. Therefore, the sale is unlikely to occur until after the expiration of this 60-day period, which is expected to be in March.
Signs of Potential Relief
There are signs that the selling pressure on Bitcoin may soon cool off. Grayscale’s GBTC, a popular investment fund, has experienced lower outflows in recent days. After the fund saw its largest outflow of $640 million on January 22, it has since seen outflows of $515 million, $429 million, and $394 million on January 23, 24, and 25, respectively. If this trend continues, it is expected that the investment fund will stabilize, providing some relief to the crypto market.
At the time of writing, Bitcoin is trading just above $40,000, showing signs of recovery in the past 24 hours.
The US government’s plans to sell a significant amount of Bitcoin add to the existing selling pressure on the crypto market. Concerns arise regarding the potential impact on Bitcoin’s price and the broader market sentiments. However, given the 60-day claim period, the immediate effect of the sale may not be felt until after the expiration of this period. Additionally, recent trends in the outflows of Grayscale’s investment fund suggest the selling pressure may soon cool off, providing some relief to the market.
As always, it is essential for investors to conduct their own research and exercise caution when making investment decisions in the crypto market, as it carries inherent risks. This article serves only as educational content and does not represent the opinions of NewsBTC on investment strategies.
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