The Department of Justice (DOJ) has been given the green light to sell $6.5 billion worth of Bitcoin seized during the Silk Road case. However, 69,370 BTC remain unsold, keeping the market on edge as Bitcoin’s price experiences significant pressure. After reaching an all-time high of $108,000, Bitcoin has fallen 13.5%, trading at $93,500. This sharp drop highlights the volatility inherent in the market, particularly for short-term holders.
In the last 24 hours alone, short-term holders sent 36,400 BTC to exchanges, mostly at a loss. This is evident from the Spent Output Profit Ratio (SOPR), which currently sits below 1, reflecting the market’s struggle. Despite this short-term turbulence, Bitcoin’s realized market capitalization has surged by $381.7 billion over the past year, underlining the asset’s long-term growth potential.
The Impact of DOJ Bitcoin Sale on the Market
The market’s reaction to the DOJ’s sale will depend largely on the method of liquidation. If sold via Over-the-Counter (OTC) transactions, the sale would likely have minimal impact on Bitcoin’s price. However, exchange-based sales could lead to significant volatility, reminiscent of the 2024 sale of 50,000 BTC by Germany, which shook the market.
How significant is the selling pressure from Silk Road Coins?
— CryptoQuant.com (@cryptoquant_com) January 9, 2025
In the long-term; very little.
Over the last 365 days, the Realized Cap of Bitcoin increased by $381.7B, while the potential selling pressure from U.S. Government Silk Road coins is 'just' $6.5B. pic.twitter.com/YAV6V1v4pZ
This announcement comes at a critical time, with only weeks remaining before a new U.S. administration takes office. Speculation is rife regarding whether the Treasury could hold onto the seized Bitcoin as a strategic reserve currency. However, such a move would require changes to U.S. laws and DOJ policies, making it unlikely in the short term.
Legal and Policy Challenges
Analyst Carlo highlights that the DOJ typically converts seized assets into U.S. dollars for clarity, but the Silk Road Bitcoin sale has been delayed due to legal disputes, such as ownership claims from entities like Battle Born Investments. The sale’s timeline has been further complicated by the existing legal framework, which favors liquidation over holding volatile crypto assets.
So why would DOJ sell 69,000 BTC two weeks before the incoming administration takes power? Let’s discuss.
— Carlo⚖️ (@TheDeFiDefender) January 9, 2025
Under current U.S. law, the Department of Justice (DOJ) is not obligated to immediately liquidate seized assets like Bitcoin (BTC). However, standard practice has been to… pic.twitter.com/Qt0VvpncvM
While the DOJ’s Bitcoin sale will likely cause short-term market fluctuations, its long-term impact appears minimal. The incoming administration’s approach to crypto policies remains uncertain, and any major changes would require significant legal or executive action.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: Federal Judge Greenlights DOJ to Liquidate $6.5B in Seized Silk Road Bitcoin, Ending Legal Battle
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