Crypto Markets Plunge as US Government Transfers $600 Million in Bitcoin to Coinbase

According to on-chain data, the US government transferred 10,000 Bitcoin (BTC) to Coinbase Prime, an institutional trading platform. This transaction, worth approximately $593.5 million, notably influenced the crypto market trends.

The Bitcoin originated from the Silk Road DOJ Confiscated Funds, a government-managed account.

Is the US Government Planning to Sell Bitcoin?

Observers are speculating about the government’s motives, as such deposits to exchanges typically suggest a potential sale. However, the context indicates a strategy more aligned with custodial intentions, particularly in light of the recent partnership between the US Marshals Service and Coinbase Prime.

Read more: Coinbase Review 2024: The Best Crypto Exchange for Beginners?

Institutional investors use Coinbase Prime for custody and trading large-cap crypto. Hence, the transfer to the platform might not necessarily indicate a sale. However, it’s difficult to accurately track the movement of funds after they are moved to centralized exchanges.

“I wish this assumption is wrong and this is just fud, but still need to remain open-minded, as trading can never rely on “Hope” but need to manage risks accordingly,” crypto trader Nachi said.

The timing of the transfer coincided with a sharp 4% decline in Bitcoin’s value. Within 24 hours, it plummeted from a high of $61,800 to about $58,397.

Concurrently, all spot Bitcoin Exchange Traded Funds (ETFs) recorded a net outflow of $81.4 million for the first time this week. Grayscale’s Bitcoin Trust and Fidelity’s Bitcoin Fund saw the largest withdrawals, totaling $56.9 million and $18 million, respectively.

According to Spot On Chain, this year, the US government has moved 15,999 BTC, valued at approximately $966.5 million, to Coinbase at an average price of $60,410. Currently, the government retains about 203,600 BTC across various addresses, worth nearly $11.91 billion.

“If they really started selling, cant imagine why they won’t sell the rest,” Nachi said.

The government’s engagement in Bitcoin transactions follows the 2022 seizure of over 50,000 BTC from James Zhong. He was convicted of wire fraud after allegedly manipulating transactions on the dark web marketplace Silk Road.

Read more: Who Owns the Most Bitcoin in 2024?

The last publicized sale of Silk Road-related assets by the government was in March 2023. During that sale, over 9,800 BTC were offloaded for around $216 million.