U.S. Government Transfers $594 Million Silk Road Bitcoin to Coinbase

In a significant movement of seized cryptocurrency, the U.S. government has transferred $593.5 million worth of Bitcoin to Coinbase Prime, the preferred crypto brokerage platform. The transfer, involving 10,000 BTC, was executed on August 14, according to blockchain analytics firm Arkham Intel. The Bitcoin, originally seized from the Silk Road darknet market, was sent to the wallet identified as “bc1ql” two weeks prior to the transfer.

The market responded swiftly, with Bitcoin prices dropping 3.6% following the news. This decline occurred despite an initial surge in BTC’s price to around $59,100, driven by positive Consumer Price Index (CPI) data.

Speculation is growing about the timing of these transfers, particularly as the U.S. government also moved $2 billion in Bitcoin in late July, with the recipient believed to be Coinbase. This has led to discussions about whether the current administration is reducing its Bitcoin holdings ahead of the upcoming winter elections. Despite these significant liquidations, the U.S. remains the largest sovereign holder of Bitcoin, with a reserve exceeding $11 billion.

Amid this, U.S. Senator Ted Cruz has emerged as a vocal advocate for Bitcoin, referring to it as a “reservoir of power” capable of enhancing Texas’s power grid systems. Cruz’s comments come as the market anticipates potential volatility and increased sell pressure due to the government’s actions.

In addition to the government’s $2.5 billion Bitcoin transfers, the ongoing repayments to Mt. Gox customers are adding further potential for market fluctuations. BitGo, the custodian for Mt. Gox’s BTC, received $2 billion for distribution, which could lead to more selling as claimants seek to cash out.

The market’s ability to absorb this selling pressure remains uncertain, although inflows into spot Bitcoin exchange-traded funds (ETFs) may help stabilize prices.

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