US Government's Planned $118M Bitcoin SaleThe United States government's announcement of a planned $118 million Bitcoin sale has sparked discussions and debates within the crypto community. The planned sale comes in the wake of the Jan. 8 sentencing of Silk Road Xanax dealer Ryan Farace and his father Joseph Farace for money laundering conspiracy. While some express concerns about the potential impact of this sale on the market, market commentators argue that it's merely a drop in the bucket compared to the recent outflows from Grayscale's Bitcoin Trust (GBTC).
Grayscale's Dominance:
The magnitude of the US government's planned sale becomes apparent when compared to the outflows from Grayscale's Bitcoin Trust (GBTC). According to Steven Lubka, managing director at Bitcoin exchange Swan Bitcoin, the government's sale of 2,934 CRYPTOCAP:BTC is nothing more than "peanuts" when considering that GBTC has sold a staggering 106,575 CRYPTOCAP:BTC worth $4.2 billion since its conversion to a spot Bitcoin exchange-traded fund on Jan. 11. The latest outflow, totaling 10,871 CRYPTOCAP:BTC on Jan. 24, underscores the dominance of Grayscale in terms of Bitcoin holdings.
Comparing the Numbers:
The planned government sale constitutes just 1.5% of the total estimated 194,188 CRYPTOCAP:BTC , equivalent to $7.7 billion, it holds from three seizures in criminal cases. This figure is still less than 1% of Bitcoin's circulating supply. The three major Bitcoin hauls and sales by the US government involve 94,643 CRYPTOCAP:BTC seized in January 2022 from the 2016 Bitfinex hack, 69,369 CRYPTOCAP:BTC seized in November 2020 from the Silk Road, and 51,326 CRYPTOCAP:BTC seized from Silk Road hacker James Zhong. Additionally, around 41,000 CRYPTOCAP:BTC is scheduled for offloading in four sales throughout 2023.
Historical Perspective:
The US government has a history of auctioning seized Bitcoin, with one of the most notable instances being the 2014 auction where venture capitalist Tim Draper acquired nearly 30,000 $BTC. However, recent trends indicate a shift toward selling seized crypto on exchanges instead of through traditional auctions. The last known sale of 9,118 CRYPTOCAP:BTC occurred in March 2023, emphasizing the evolving methods employed by the government to liquidate confiscated cryptocurrencies.
Conclusion:
While the announcement of the US government's planned $118 million Bitcoin sale has raised eyebrows, experts and market commentators are quick to downplay its significance. In the context of Grayscale's massive outflows and the overall scale of Bitcoin holdings by the government, the planned sale appears to be a minor event in the broader cryptocurrency landscape. As the crypto market continues to evolve, the methods of selling seized assets by the government are adapting, reflecting the maturation of the industry.
