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Bitcoin Drops Below $59K After $591 Million Transfer From Silk Road by US Authorities

Wednesday saw a sharp decline in the price of bitcoin, falling below $59,000 in response to a big move by the US government. 10,000 Bitcoins

Arslan Butt•Thursday, August 15, 2024•2 min read

During the early Asian session, the leading cryptocurrency, Bitcoin, exhibited a sharp decline in the price of bitcoin, falling below $59,000 in response to a big move by the US government. The government handed 10,000 Bitcoins, or approximately $591 million, to Coinbase Prime.

This transaction is the most recent in a string of well-known exchanges involving Bitcoin that were taken during the raid on the Silk Road.

The US government is one of the largest Bitcoin holders, and their transfer of such a huge volume of cryptocurrency has alarmed investors and caused a recent price decrease.

 

As per Arkham Intelligence, the transfer was started at 15:38:31 UTC on August 14, 2024, from the US government wallet named “US Government: Silk Road DOJ”.

The government has already moved to take Bitcoin before; in July, 29,800 BTC, worth around $2 billion, were transferred in a manner akin to this one. According to reports, the government is the biggest geopolitical Bitcoin holder, holding 203,000 Bitcoin worth over $12 billion.

Concurrent with this transfer are the US Consumer Price Index (CPI) inflation data for July, which revealed a 2.9% increase in comparison to the previous year.

This was less than expected and the lowest number since 2021. The declining pace of inflation suggests that the Federal Reserve may cut interest rates in September, which would raise the price of risky assets like cryptocurrencies.

But in the near run, the market’s response has been influenced by the government’s transfer of Bitcoin, which has eclipsed the encouraging CPI figures.

Historically, big fund reserves, like those owned by Germany’s ETC Group Physical Bitcoin (BTCE), have had a significant impact on the price of bitcoin.

When the BTCE reserve grows, the price of Bitcoin usually rises, and when it lowers, the price usually falls.

Since the introduction of spot Bitcoin ETFs in the US early this year, though, this tendency seems to have changed. Bitcoin’s price has not declined as predicted despite a decrease in the BTCE reserve, indicating that other market factors may be at work.

Due to investors’ concerns over the implications of moving such a substantial quantity of Bitcoin, the US government’s recent transfer has raised concerns about a possible market dump.

This anxiety is not unjustified; the German government sold 50,000 Bitcoin in July, causing a notable stir in the market.

This sell-off highlights the market’s vulnerability to large-scale Bitcoin transactions, even if analysts pointed out that Germany lost out on possible profits by selling too soon, which led to criticism of the move.

The market is still processing the implications of the US government’s actions on Bitcoin and the potential for lower interest rates, which has left investors nervous.

These factors coming together could lead to further volatility in the bitcoin market in the coming weeks.

ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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