U.S. Government transfers $1B BTC to new wallet addresses

Authorities moved the bitcoin in three transactions, according to data from blockchain security firm PeckShield

U.S. authorities moved $1b worth of bitcoin (BTC) recovered from a dark web hack to new wallet addresses, including one owned by Coinbase, on Wednesday, adding fuel to investor concerns that strong sell pressures bring down the token’s price.

Authorities transferred the bitcoin in three transactions, as per data from blockchain security company PeckShield. Around 10,000 bitcoin were sent to Coinbase-controlled wallets, while around $41,000 tokens were directed to government-controlled wallets.

PeckShield published its findings on Twitter early Wednesday morning, and investors quickly noticed that. After the report’s release, investors revealed their concerns that authorities would sell the recovered bitcoin on the open market, possibly dipping the price of bitcoin, which has retrieved from its two-year low of nearly $15,500 in November. The worries caused bitcoin’s price to tumble around 2 per cent, pushing it under $22,000.

An open market sale would be a deviation from authorities’ past handlings of seized digital assets. The government generally sells seized assets at auction. In 2014 and 2015, the government auctioned off bitcoin seized from the owner of virtual black market platform Silk Road.

Although worries about the tokens’ sale on the open market may be overblown, concerns that bitcoin prices could take a hit are not completely unjustified, according to Conor Ryder, a researcher at crypto markets analysis firm Kaiko.

The shifting of Silk Road bitcoin to Coinbase is almost certainly being done with the purpose to sell (the recovered tokens), so one has to wonder if bitcoin is due for some short term headwinds, Ryder told CoinDesk.

Whether the market will absorb those pressures will likely boil down to the market’s structure, according to Mark Connors, head of research at 3iq, a digital asset manager. In other words, who token holders are and how many tokens they hold will mostly impact the extent to which the market responds to a possible market-moving event.