Bitcoin (BTC-USD) fell by around 3% on Thursday as traders reacted to reports that the US government has allegedly received final approval to sell a large cache of bitcoin that was seized from the Silk Road darknet marketplace.
Bitcoin’s price was $93,540 (£76,198) on Thursday, according to CoinGecko data. The broader cryptocurrency market also saw a downturn, with the total market cap falling 3.3% to $3.42tn.
Investors are worried that a sale of the government’s bitcoin stash — valued at approximately $6.5bn — could trigger market volatility and impact cryptocurrency prices.
The US Department of Justice (DOJ) reportedly secured authorisation from the Northern District Court of California to liquidate 69,370 bitcoin, marking the closure of a complex, multi-year legal battle over one of the largest cryptocurrency seizures in history, according to the DeCrypt news outlet.
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The court ruling was handed down by chief US district judge Richard Seeborg, who denied a motion to block the forfeiture of the assets, according to a court document filed on 30 December 2024.
The court’s decision potentially clears the way for the DOJ to proceed with the sale, though federal asset liquidation processes typically require multiple administrative steps. Historically, large asset liquidations by government agencies have been carried out gradually to avoid significant market disruptions.
The resolution comes at a politically sensitive time for government-held crypto assets as traders await the imminent arrival of Donald Trump’s crypto-friendly administration.
Bitcoin traders will be closely watching the US government’s crypto wallet activity, tracked via the blockchain analytics platform Arkham Intelligence. If the bitcoin remains unsold before Trump’s inauguration on 20 January, many crypto investors believe it is more likely the sale will be blocked.
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Trump has previously suggested that his administration would take a hands-off approach to government-held crypto assets. However, the current government still holds the authority to begin liquidation proceedings.
Bitget Research chief analyst Ryan Lee noted that a large-scale sale of bitcoin, especially from government auctions, could create significant volatility in the market.
“Large-scale bitcoin sales like this often trigger market fluctuations,” Lee said. “If the government sells the bitcoin all at once, market sentiment could shift dramatically, leading to a wave of selling and a temporary drop in bitcoin’s price.”
