The White House, home of the US President (Photo: Freepik, makoto.h)
A Sword of Damocles hangs over Bitcoin: The US government is allowed to sell 69,370 BTC that it confiscated in 2013. Investors worried: What does this mean for the Bitcoin price? Is there a risk of another crash? If so, how low can it go? And: The one planned by the Trump administration strategic Bitcoin reserve – is that a thing of the past now?
Bitcoin: minus 10,000 dollars in 48 hours – horror crash!
It was clear: BTC’s new all-time highs every day cannot continue forever. And yet: the sudden setback is surprising. Shortly before the self-proclaimed “Bitcoin President” Donald Trump takes office, the US government under Joe Biden is once again creating enormous bearish momentum: The US Department of Justice has officially announced plans to liquidate 69,370 Bitcoin – this is BTC with the current equivalent value of 1,000 Bitcoin and write 6.5 billion dollars. The stocks were confiscated in connection with the illegal online marketplace “Silk Road”. Although it was back in 2013, it was only now that the highest court gave the green light for the sale.
There is currently no information about whether, when and how the coins will go under the hammer. However, the markets still react to the development – and cause Bitcoin to undergo an intensive correction. Selling pressure drove the digital asset from nearly $102,000 to around $92,000: a loss of $10,000 in less than 48 hours. After all: Bitcoin has been fighting back since yesterday evening.
Bitcoin: forecast warns of a decline of more than 50 percent
Bulls pushed the cryptocurrency free of any resistance to as high as $95,362, where BTC is currently trading. The slight increase of 1.61 percent within the last 24 hours: a harbinger of a continuation of the upward movement – towards new all-time highs? Maybe not quite so quickly.
The elephant in the room: What does the potential sale of 69,370 BTC do to the price in the worst case scenario? “In the long term: very little,” assure the blockchain researchers at CryptoQuant in a forecast. Overall, the possible selling pressure from the Silk Road coins is “only” $6.5 billion, according to the analysts on X. Considered over a longer period of time, this is negligible. The scientists only see bearish effects on Bitcoin in the short term – and here too: it depends. And in the way of selling.
If the BTC were sold directly on the market, corresponding pressure on the price can be expected. Mass liquidations and panic selling could result. Some worst case predictions sees Bitcoin falling 50 percent or more in this scenario.
Bitcoin: US government strategic reserve in danger?
However, this does not apply if the US government decides to sell Bitcoins over-the-counter (OTC). Background: Over-the-counter deals are not processed via exchanges – the transaction takes place directly between 2 parties and therefore has no influence on the price.
The question remains: What happens to the company in the event of a sell-off planned Bitcoin reserve of the US government? A draft law (Bitcoin Reserve Act) the new administration plans to purchase 200,000 BTC annually. This is expected to increase Bitcoin holdings in Washington to 1 million BTC by 2029. Currently, the US government holds around 198,000 BTC. They should form the core of the Bitcoin Reserve.
If almost 70,000 of them go under the hammer, Trump and Co. would have to buy the coins – that is potentially bullish for the price. According to rumors, it could happen as early as Inauguration Day and the new president will order the purchase of almost $20 billion worth of BTC via an “executive order”. The race for the last BTC has begun, top analyst and mathematician Fred Krueger also comments. His simple advice: “Get as many Bitcoins as you can.”
Disclaimer:
The author and/or associated persons or companies own cryptocoins, including Bitcoins. This article represents an expression of opinion and not investment advice.