On Wednesday, the price of Bitcoin (BTC) dropped to under $20,000 for the first time since the first half of January. Before that, the planet’s most popular cryptocurrency was showing signs of possible bullish behavior, going close to $25,000 a few weeks earlier.
So, what happened that caused Bitcoin to crash on Wednesday? The Government of the United States moved about $1 billion in BTC confiscated from the dark web to new legal wallets.
US Government Moves 50,000 BTCs from Dark Web to Legal Wallets
The Bitcoins that the US Government seized from dark web platforms like Silk Road were moved from illegal wallets on Wednesday. Around 10,000 Bitcoins were sent to wallets on Coinbase, while the remaining 41,000 were sent to wallets controlled directly by the US Government.
There was no official announcement that the Silk Road BTCs would be moved, but blockchain security company PeckShield was quick to spot the movement, publishing its finishing on social media.
Reactions in the crypto community were mostly negative, with investors expressing their fears that the Government’s decision to move BTC could affect its price negatively. Judging by the comments on Twitter, they’re certain that the intention of the Government is to sell those BTCs.
It’s speculated that many investors decided to offload their crypto assets straight away, which, in turn, caused Bitcoin’s price to drop.
Will US Government Sell Silk Coin Bitcoins?
According to crypto analyst Conor Ryder from Kaiko, it’s very likely that the next step is going to be to offload those 50,000+ tokens. There doesn’t seem to be any other reason for the Government to move them to Coinbase other than to sell them.
However, that’s not something the US authorities have done in the past. Back in 2014, for example, rather than selling the BTCs seized from Silk Road, the Government auctioned them off.
If the government-owned tokens go on sale, we’ll probably see another drop in price. The good news, however, is that it shouldn’t last for too long. Most analysts agree that BTC will rebound back and start hurling toward the $25,000 mark over the next couple of months.
Whether the BTC price will go over that number by the end of the year is something we’ve touched upon in our cryptocurrency predictions for 2023.