Bitcoin Loses Momentum after US Government Transfer
Bitcoin was gaining steam recently, with a 7.3% increase over the weekend. On Tuesday, the coin dropped by 1.34% after the US government made a massive transfer of seized funds.
Those Bitcoin funds amounted to about $4 million, which is only a fraction of what Bitcoin trades in a 24-hour period, but the move has investors worried. Over the past few weeks, we have seen major transfers from the US government, the German government, and the defunct crypto exchange Mt. Gox. All of these Bitcoin transfers have drastically affected the price of the token, creating an influx of assets that devalued the cryptocurrency.
The latest US government transfer is from funds that were seized back in 2018 from Ryan Farace, who was arrested for selling Xanax drugs illegally on the internet’s dark web. A total of 2,933 BTC was seized from both Farace and his father, who also assisted in his son’s illegal activities. The government announced in January of this year that it would be liquidating the funds, and we are now seeing some of those funds make their way back into crypto accounts.
Will There Be a Bitcoin Value Crisis?
The Bitcoin that the US government transferred today only amounted to 58.742 coins. That accounts for just 1.9% of the total seized funds, which means that the minor drop we saw today could be amplified in the future. How the government plans to move the funds and the timeline for that is still unannounced. It could have a major impact on the price of Bitcoin, though.
The government likely will not announce when the funds are going to be transferred or how much will be transferred at a time, since that would give investors a heads up about the value of Bitcoin changing. A major transfer could drastically affect the market, and the government will want to avoid that, if possible. We may see more small deposits sent irregularly as a way to keep investors guessing and to create a healthy market.
Outside of US inflation, we have seen payouts and the transfer of seized funds cause the largest impact on the crypto market this year, and it looks like these kinds of token transfers may continue to rock the market throughout 2024, potentially holding Bitcoin back from achieving a new all-time high.
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