The U.S. Department of Justice (DOJ) plans to auction $6.5 billion worth of Bitcoin (BTC) seized from Silk Road. This decision follows a court ruling on December 30, ending a long legal battle over ownership of BTC.
The US Government Could Sell More BTC Than Trump
As of January 9, the U.S. government held 198,000 BTC worth about $18.5 billion, according to data resource Arkham Intelligence. $6.5 billion is part of the same reserves.
History of U.S. government Bitcoin balances. Source: Arkham Intelligence
Some analysts are speculating that the outgoing Joe Biden administration may sell off all government-held Bitcoin in a politically motivated decision ahead of the election of President Donald Trump.
Fox Business contributor Jason Williams argues that the Biden administration is directing the Department of Justice (DOJ) to offload thousands of bitcoins during the bull market, suggesting that the incoming Trump administration could buy them at higher prices. I fully realize that I can live again.
“This is a blatant distortion of the government’s fiduciary responsibility,” Williams added.
“We are selling Bitcoin for around $94,000. What price will Trump have to pay to buy it back? higher.”
Can the Department of Justice Sell Bitcoin Price?
After the ruling, the price of Bitcoin fell 2.78%. The decline comes amid market concerns that the DOJ’s potential Bitcoin auction could put additional downward pressure on the BTC price.
BTC/USD daily price chart. Source: TradingView
However, history shows that US government Bitcoin auctions have had little lasting impact on the price of BTC.
For example, from March 2023 to present, the US government’s Bitcoin holdings have decreased from 236,000 BTC to 198,000 BTC. This is a decrease of approximately 38,000 BTC, worth approximately $3.54 billion at current prices.
Despite the sell-off, Bitcoin prices continued to rise, driven by strong demand for the newly launched physical Bitcoin exchange-traded fund (ETF) and optimism surrounding Trump’s campaign promise to include Bitcoin in the U.S. Strategic Reserve. It soared 375% during the same period.
relevant: Bitcoin Whale Collects 34,000 BTC After December Dump: Analyst
Glassnode co-founders Jan Happel and Yann Allemann clarified how the US government will handle Bitcoin sales.
They noted that once Bitcoin is confiscated, the DOJ transfers it to the US Marshals Service, which manages its sale through public auction. These auctions are transparent and do not involve selling Bitcoin directly on a cryptocurrency exchange.
Selling directly through an exchange can flood the market with supply and cause prices to plummet, while auctions minimize this risk.
US government won’t miss out on $17.9 billion in Bitcoin revenue
The US government has already missed out on huge profits from previous Bitcoin sales.
The government has seized and sold approximately 195,092 BTC over the years, generating approximately $366.5 million in revenue from these auctions. However, at current prices, the cumulative value of Bitcoin sold is approximately $18.25 billion.
The US government has seized a BTC sales tracker. source: Jlopp.Github
This means the government missed out on nearly $17.9 billion in potential profits, highlighting the significant opportunity cost of liquidating holdings early.
“Last year, $379 billion entered the market based on realized caps – that’s about $1 billion per day,” added Joo Ki-young, founder and CEO of data platform CryptoQuant.
“The US government selling $6.5 billion could be absorbed in just one week. “Don’t panic.”
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.