Recently, the US Department of Justice announced approval to sell 69370 bitcoins, worth approximately $6.5 billion, seized from the dark web marketplace Silk Road. This decision has aroused widespread concern and discussion in the market, especially in the context of the upcoming re appointment of President elect Trump. Trump made it clear during the election campaign that the government would establish a "Bitcoin reserve" and promised to "never sell" the seized Bitcoin. Therefore, this ruling not only involves fluctuations in the cryptocurrency market, but also relates to future government cryptocurrency policies.
The US Department of Justice (DOJ) obtained approval from a federal judge as early as December 30, 2023, to liquidate these bitcoins. As market volatility intensifies, the urgency for DOJ to drive this sale becomes increasingly apparent.
For a long time, the market has been concerned about when Bitcoin from the Silk Road will be sold. Many people are concerned that if the government sells it, it will have a significant impact on the price of Bitcoin. However, after the announcement of the sale, the price of Bitcoin only fell briefly, and the decline did not last long. This fluctuation reflects the market's high sensitivity to the upcoming sale of Bitcoin.
In addition, how the cleared Bitcoin will be handled and whether it will be auctioned in C2C or OTC format remains a focus of market attention. Due to the potential involvement of multiple auction stages in this process, the direct impact on the secondary market remains to be observed. And even if the court has given the green light, the liquidation of this asset still requires multiple administrative procedures, and the sale may not be immediately initiated in the short term.
Regarding this, Jarod Koopman, Executive Director of the IRS Cyber and Forensic Services Division, stated that the government's actions will follow legal procedures and the sale time will be arranged according to regulations, rather than selling everything at once. This cautious approach aims to minimize adverse effects on the market.
According to current information, although the US government holds over 200000 bitcoins, the sale of the seized bitcoins from the Silk Road will be an important litmus test. The market is generally concerned about how the government can find a balance between ensuring market stability and meeting legal procedures, and investors and participants will closely monitor the specific arrangements of the Ministry of Justice in the Bitcoin sale process.
It is worth mentioning that according to court documents, as early as December 30, 2024, Chief Justice Richard Seeborg of the Northern California District Court rejected Battle Born Investments' request to delay the sale of these 69370 bitcoins and officially approved the Department of Justice's liquidation of these assets. As for why this court document has only been made public now, the specific reason is still unknown, and the Ministry of Justice has refused to respond to media requests for comment.
However, the timing of this ruling being made public is quite intriguing, as it coincides with a sensitive period of highly politicized US cryptocurrency policy. Trump, who will take office on January 20, made a statement during the election campaign, promising to build a strategic reserve of bitcoin based on the bitcoin owned by the US government and never sell it. However, this commitment is now facing practical challenges, and the market is uncertain about the policies of the upcoming new government. If Trump takes a different position on the disposal of these bitcoins after taking office, it is still unknown what impact it will have on the market.
Market impact prediction
1. Potential market volatility
Although the daily trading volume of Bitcoin is about $20 billion, large-scale liquidation often triggers panic selling among retail investors, which may amplify price fluctuations. Historical experience has shown that market sentiment is a key factor determining price fluctuations.
2. Institutions and Supporting Forces
-Arthur Hayes (founder of BitMEX) stated that he is prepared to buy when Bitcoin falls.
-The CEO of CryptoQuant pointed out that the market may absorb this $6.5 billion supply of Bitcoin within a week.
-Salvadoran President Nayib Bukele sees this decline as an opportunity to buy at a discount, expressing a long-term bullish stance on Bitcoin.
The support of these institutions and leading figures helps alleviate market panic and prevent prices from falling into uncontrollable ranges.
Key challenges and uncertainties
Despite the confidence of supporters, if the price of Bitcoin falls below the psychological support level of $80000, market panic may intensify again. This chain reaction may lead to more retail investors joining the sell-off, further amplifying the decline.
It should be noted that the impact of large-scale liquidation in history is often underestimated, so investors need to prepare multiple contingency plans.
Investor response strategies
1. Stay calm and avoid emotional manipulation: Short term fluctuations do not represent long-term trends, and investors should avoid selling their funds in panic
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2. Pay attention to key support levels: If the price is close to important technical support levels, consider phased layout.
3. Tracking institutional movements: Observing the actions of major market participants, who often provide important market signals.
Conclusion:
The long-term fundamentals of the Bitcoin market remain strong, but this liquidation may trigger price fluctuations in the short term. For investors, it is crucial to understand potential situations and develop reasonable response plans. The market adjustment may be brief, but it also provides rare buying opportunities for long-term investors. The market trend in the coming weeks will be an important moment to test the maturity of the market, and investors need to closely monitor the dynamics and rationally evaluate risks and opportunities.
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