Source: Adobe / Jiri Hera
Bitcoin price (BTC) has been a runaway train lately and there doesn’t seem to be anything to get in its way. Some believe that even if one of the largest BTC whales, the US government, decides to sell its billion dollar warehouse, it would not have a significant impact on the market as the BTC trading volume would increase in a month than has doubled.
The U.S. Department of Justice (DoJ) reportedly forfeited BTC 69,370 worth over $ 1 billion in November. At the time of writing (07:59 UTC) it is worth more than USD 2.7 billion as BTC trades at USD 39,629 after briefly touching USD 42,000 yesterday.
The U.S. government now controls the sixth richest BTC address (and fourth richest if we exclude addresses controlled by crypto exchanges).
Source: bitinfocharts.com
Meanwhile, the U.S. Attorney’s Office for the Northern District of California recently filed a civil lawsuit over the forfeiture of these coins. If history is any clue, the bitcoins could be sold in auction by the US Marshals Service. It did so in 2014 and 2015 when the U.S. government took control of more than 144,000 BTC – valued at $ 122 million then and is now $ 5.7 billion – and sold them.
Indeed, auctioning the bitcoins could be tempting to a new government, to whom the cash cone will continue to open as the pandemic gets a tight grip on the economy.
A question of “US national security”
If the US government goes down a similar path this time around, it will be difficult to know how the market would react until it actually happens. However, Pierre Rochard, a Bitcoin strategist on the Kraken exchange, points out that the sale would be a drop in the ocean compared to the robust trading activity in the BTC market lately. Today, the 24-hour BTC trading volume is around $ 70 billion (averaging around $ 30 billion in December).
“So I don’t think a $ 3 billion auction would have any significant effect,” Rochard told Cryptonews.com.
But he said he was concerned about the bigger picture: “I think the auction would undermine US national security.”
In a recent post on GitHub, Rochard further noted:
“The rapid auctioning of confiscated Bitcoin [in 2014 and 2015] was a mistake from my point of view and in retrospect. The Federal Reserve can create an infinite amount of US dollars from the proceeds of the auction. Bitcoins cannot be made out of nothing and there are only a limited amount of them available. ”
As a result, Rochard declares that he is “advocating laws to prevent the auction for reasons of US national security.”
One of the bills he supports is the Bitcoin HODL Act, which would allow the US Marshals Service to “securely hold and store bitcoin assets acquired by seizure until additional laws are passed with immediate effect”.
Instead, the BTC would be held in a custody account managed by the U.S. Treasury Department with no risk of selling, swapping, auctioning, or otherwise encumbering the assets until further laws are in place.
The DoJ did not respond to our request for comment.
Meanwhile, Rachid Ajaja, CEO and founder of AllianceBlock, said it is unlikely that BTC whales – the ones that hold enough BTC to sway the price – will sell anytime soon.
“Bitcoin is currently experiencing a supply shock and miners are unable to keep up with demand. Because of this, whales are unlikely to give up BTC liquidity until the price is closer to over $ 100,000, ”he said, adding that a crash we are seeing won’t be as drastic as that due to heightened network effects that we saw before and institutional engagement.
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