CryptoQuant’s recent report suggests that the US government selling $6.5 billion in Bitcoin confiscated from Silk Road would not have a negative impact on the market if sold through over-the-counter (OTC) desks. The concerns surrounding the potential sale of the Bitcoin stash, currently valued at $6.5 billion, have sparked discussions about its effects on the broader market.
The US Department of Justice (DOJ) was recently given the green light to sell the BTC on Jan. 8, but there has been no movement recorded in the Silk Road Bitcoin stash. Bitcoin experienced a 15% drop from its all-time high of $108,000 to $92,099.54, primarily due to short-term holders selling in a panic. Over the past 24 hours, approximately 36,400 BTC were transferred from short-term holders to exchanges, causing the Spent Output Profit Ratio (SOPR) to fall below 1. This movement indicates that these coins were moved at a loss, contributing to the market’s downward pressure.
Despite these short-term fluctuations, CryptoQuant’s analysis suggests that the potential selling pressure from the Silk Road stash is minimal in the long term. The firm points out that Bitcoin’s realized market cap has increased by $381.7 billion over the past year, far surpassing the $6.5 billion represented by the Silk Road stash.
In terms of the method of sale, selling the Silk Road stash through OTC desks would help maintain market integrity in the short term. However, dumping $6.5 billion worth of BTC on the spot market could lead to significant price corrections. A similar scenario occurred when the German government sold 50,000 BTC in July 2024, impacting Bitcoin’s price noticeably. The potential negative volatility in the current scenario depends on how the DOJ chooses to sell the BTC.
Even with the uncertainty surrounding the sale, various on-chain metrics indicate a strong market. CryptoQuant CEO Ki Young Ju highlighted on Jan. 7 that Bitcoin’s apparent demand remains high. Apparent demand is calculated as the difference between Bitcoin production through mining and changes in inventory, which refers to the supply that has been inactive for over a year. Additionally, Ju emphasized that Bitcoin will continue on an upward trajectory as long as capital flows into the market, with BTC’s realized cap currently at its highest levels.
Overall, the potential sale of the Silk Road Bitcoin stash by the US government may not have a significant impact on the market if executed carefully. By leveraging OTC desks and monitoring market conditions, any potential disruptions can be mitigated, ensuring a smooth transaction process.