In a significant move, the U.S. government has liquidated 69,370 Bitcoins, valued at $6.7 billion, which were seized from the Silk Road dark web marketplace. This sale follows approval from the U.S. Department of Justice (DOJ), ending a protracted legal battle over the ownership of these assets. However, the decision has sparked concern among investors, raising questions about a potential Bitcoin price crash below the $90,000 mark.
US Government Liquidates Seized Bitcoin
The DOJ’s decision to allow the sale of the seized Bitcoins comes after a lengthy dispute with Battle Born Investments, which had attempted to claim the assets through a bankruptcy proceeding. The federal judge’s ruling on December 30 cleared the way for the sale, which was completed on January 8. Following the liquidation, the U.S. government’s Bitcoin wallet, previously holding $6.7 billion worth of BTC, is now empty, according to data from Arkham Intelligence.
The DOJ cited the volatility of Bitcoin’s price as the primary reason for the swift liquidation, noting that holding onto the assets any longer could expose the government to significant financial losses. This decision has raised eyebrows, especially considering that the sale took place just 10 days before the inauguration of President Donald Trump, whose team has reportedly considered building a Bitcoin reserve.
Bitcoin Price Faces Strong Selling Pressure
The announcement of the sale has had an immediate impact on Bitcoin’s price. The cryptocurrency dropped below $93,000 earlier today, raising concerns that a further dip to below $90,000 could be imminent. As of now, Bitcoin is trading at $93,915, reflecting a 2.47% decline. The ongoing sell-off comes after Bitcoin faced rejection at the $100,000 level, wiping out most of its recent gains.
Adding to the bearish sentiment, Bitcoin’s funding rates have dropped significantly, signaling a decline in demand from traders. CryptoQuant analyst ShayanBTC pointed out that while funding rates surged during Bitcoin’s recent rally, they have since declined following the rejection at the $108,000 resistance level. Additionally, on-chain data reveals that short-term traders have moved 23,200 BTC to exchanges at a loss, suggesting panic selling is underway.
Criticism and Optimism from Bitcoin Advocates
The U.S. government’s decision has been met with strong criticism from Battle Born Investments, whose legal team accused the DOJ of abusing the civil asset forfeiture process. Despite this, there are still vocal supporters of Bitcoin who remain bullish on its future.
Prominent investor Robert Kiyosaki, known for his long-term Bitcoin advocacy, sees the price dip as a buying opportunity. He tweeted, “Bitcoin crashing. Great news. I continue buying Bitcoin because Bitcoin crashing means Bitcoin is on sale. Remember ‘Buy low… and HODL.'”
Meanwhile, former BitMEX CEO Arthur Hayes predicts that a $612 billion liquidity injection in Q1 2025 could drive Bitcoin to new highs. Additionally, El Salvador’s President Nayib Bukele hinted at the possibility of the country adding more Bitcoin to its reserves, suggesting that the U.S. government’s sell-off might present a buying opportunity for others.
Will Bitcoin Bounce Back?
While Bitcoin’s price is currently under pressure, its long-term prospects remain a topic of debate. The asset has historically shown resilience following periods of volatility, and many analysts believe it could rebound once the market stabilizes. However, with the current market conditions and the impact of the U.S. government’s Bitcoin liquidation, investors are closely watching for any signs of further price declines or a potential recovery.
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