Bitcoin dipped 1.6% in the past 24 hours, dropping below $22,000 in valuation, after a large transfer by the federal government unsettled investors.
Key Details
- A new report from blockchain security firm PeckShield shows a March 8 transfer of $1 billion worth of Bitcoin recovered from hacking incidents to three separate accounts.
- These funds came from the “Silk Road crime proceeds,” or money ceased by the federal government from the illegal Silk Road drug trafficking website shut down in 2013. These funds were ceased in 2021 and 2022.
- The large transfer scared investors who feared that 50,000 Bitcoin being added into the marketplace would affect valuation.
Why It’s Important
The movement of this much currency unnerved the market, which feared what pressures and fluctuations of suddenly reintroducing thousands of Bitcoin might do to the market. However, with no immediate government plans, the noted price fluctuations are just a momentary nervous reaction from investors.
As CoinDesk reports, there are several unknowns in the transfer that make a sound judgment on the federal government’s transfer clear for Bitcoin investors. In 2014 and 2015, the federal government previously auctioned off several of Silk Road’s Bitcoins after obtaining them. In this case, it is unclear who the recipient of the Bitcoins was, with two wallet’s worth of ceased assets being transferred to unknown accounts. It may choose to auction these tokens, internally transfer them, or keep them.
Of the more than 50,000 tokens, 9,861 were sent directly to Coinbase. The other 39,000 were sent to two different accounts, according to CoinTelegraph.
Backing Up A Bit
As we previously reported, Bitcoin hit a recent high in January after months of low prices. After prices peaked at nearly $70,000 in November 2021, the price dropped to $15,500 in the aftermath of the collapse of FTX. Prices surged to $24,000 for several weeks. ARK Invest CEO Cathie Wood is bullish on Bitcoin and has repeatedly predicted the currency will reach a $1 million valuation in seven years.
Notable Quote
“The movement of Silk Road bitcoin to Coinbase is almost definitely being done with the intention to sell [the recovered tokens], so one has to wonder if bitcoin is due for some short-term headwinds … There should be a quicker bounce back if there’s sell pressure, given the larger amount of push [in] the market today compared with the weaker hands and greater leverage [that characterized the market] a year ago,” crypto researcher Conor Ryder tells CoinDesk.