Market fears of potential selling pressure from a potential sell-off via Silk Road are overblown: Van Straaten

To the outside world, Bitcoin (BTC) falling from $10,000 to $92,000 in a matter of days may signal the end of an uptrend. A caveat to this might be that Bitcoin continues to consolidate below the key psychological threshold of $100,000.

Unconfirmed reports from DB News It notes that the Department of Justice (DOJ) was given the authority to liquidate 69,370 Bitcoins ($6.5 billion) seized from the Silk Road market.

The report comes just 11 days after the inauguration of President-elect Donald Trump. Trump has pledged not to sell any of the 187,236 bitcoins still in the possession of the US government, according to Glassnode data. The majority of tokens held by the government come from the seizures of Bitfinex and Silk Road.

There are a few reasons why fears of a sell-off may be overblown: Reports of 69,370 BTC being liquidated seem like a lot, and if they are sold, they will likely be sold in an orderly manner as they are sought to get the best possible price. At the same time, the market already knew this was a possibility, so this could have already been in line with market expectations.

Second, the market has absorbed more than 1 million Bitcoins since September. This can be demonstrated by the decline in holdings of long-term Bitcoin holders, who are defined by Glassnode as investors who have held Bitcoin for longer than 155 days. As a group, they now have 13.1 million bitcoins. However, since September, the price has risen from around $60,000 to over $100,000.

The final reason is that we have previous data of another government selling a similar amount of Bitcoin. The German government sold roughly 50,000 bitcoins from mid-June to mid-July of 2023. The total value of the coins was about $3.5 billion at the time, about half the value now.

However, the market actually outperformed the sell-off and the price bottomed around July 7 at around $55,000 while the German government still held at least 25,000 BTC. Which shows that this amount of Bitcoin does not dictate the market.