Bitcoin (BTC-USD) fell about 2% on Thursday as concerns grew over whether the U.S. government would sell the 69,370 bitcoins it seized from the Silk Road market. Traders are concerned that a sudden influx of such large amounts of bitcoin could disrupt the market in both the short and long term.
Bitcoin’s price on Thursday was $60,900 (£46,597), according to data from CoinGecko. The broader crypto market also slumped, with its market capitalization falling 3% in the past 24 hours to $2.22 trillion (about £1.7 trillion).
Supreme Court ruling clears the way for Bitcoin sales
On Monday, the U.S. Supreme Court declined to hear an appeal in a case over Silk Road’s ownership of 69,370 bitcoins seized from a now-defunct online black market. The decision upholds an earlier ruling from 2022 that would allow the U.S. government to auction roughly $4.4 billion worth of Bitcoin at current prices.
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The appeal was filed by Battle Born Investments, which seeks to have a district court admit in 2022 and an appellate court in 2023 that it acquired Bitcoin through a bankruptcy filing. I couldn’t.
Monday’s refusal to review the case clears some of the final legal hurdles, allowing the U.S. government to move forward with a potential sale of its Bitcoin stash.
Impact on the virtual currency market
Ryan Lee, chief analyst at Bitget Research, pointed out that a large-scale sale of Bitcoin, especially a sale of Bitcoin through a government auction, could cause significant volatility in the market.
“Such large-scale Bitcoin sales often cause market volatility,” Lee said. “If the government sells Bitcoin en masse, it could dramatically change market sentiment, trigger a rush of selling, and cause Bitcoin prices to temporarily decline.”
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Mr Lee also highlighted the psychological pressure on investors. “Some investors may be concerned that these Bitcoin inflows will put downward pressure on the price, especially if they are sold on the open market. Investors may be concerned about the risk. “They may adjust their positions in advance to avoid this, potentially amplifying short-term volatility.”
However, Lee suggested that it may be easier for the market to absorb Bitcoin if it is sold in stages. “With more institutional investors and hedge funds involved, there may be the ability to handle these sales, and if Bitcoin is auctioned efficiently, the long-term price impact will be small. “It may be relatively limited.”
While these developments move the U.S. government’s potential sale of more than 69,000 confiscated Bitcoins closer to fruition, uncertainty remains as to whether and when the government will take action.
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BRN analyst Valentin Fournier said: “It is unclear whether the US government will proceed with a full liquidation or continue to hold on to the assets. “We may learn a lesson from the sale of about $57,900.” Said.
“To avoid a similar outcome, the government could choose to sell in stages or even retain its holdings.”
He noted that the market may have already priced in this possibility, which could allow Bitcoin to recover from the current decline.
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