Bitcoin Price Plummets After US Government Moves Over $1B Seized Silk Road BTCs

Over $1 billion worth of Bitcoin, which had been seized from dark web marketplace Silk Road, was moved from several U.S. government-linked wallets to multiple new wallet addresses, including Coinbase, Wednesday. This triggered fear among investors and prompted a potential crypto asset sellout that could further drive down the price of the world's largest crypto by market capitalization.

This piece of information was shared on Twitter by on-chain analytics firm PeckShield, which detailed three transfers made from U.S. law enforcement wallet addresses. The wallets reportedly contain 51,351.9 BTC recovered by authorities from Silk Road in November 2021 and in March 2022 and then consolidated into two addresses.

PeckShield further claimed that 9,861 BTC were sent to Coinbase-controlled wallets, while a total of around 41,000 tokens broken down into a 30,000 BTC transfer and a 9,000 BTC transfer were moved to government-controlled wallet addresses.

Silk Road was the first dark market powered by cryptocurrency that hosted eBay-like listings for all kinds of contraband like firearms and narcotics. It was launched by Ross Ulbricht in 2011 but was shut down a couple of years later, following its founder's arrest.

At the time, authorities seized 173,991 Bitcoin, which included 144,336 BTC owned by Ulbricht.

In November 2020, the Department of Justice filed a civil forfeiture action against a person who claimed to possess 50,000 BTC that had been stolen from Silk Road.

The latest movement of Bitcoin from the authorities' wallet addresses seemingly spooked investors who are worried the government would make a sellout of the crypto asset in the open market.

If this happens, Bitcoin's price will tank — something investors would not want to happen, especially since the price of the maiden crypto asset has barely recovered from the two-year low it experienced in November 2022 when it traded around the $15,500 price level.

Investors' concern about the government's move translated to a price dip of around 2% and saw Bitcoin trading below $22,000 Wednesday.

Conor Rayder, a market researcher at crypto market analysis company Kaiko, offered an interpretation of the government's latest action on its Bitcoin holdings.

"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," he said.

Bitcoin has seen a 1.40% price dip over the past 24 hours and was trading down $21,725.66 with a 24-hour volume of $21,558,924,778 as of 2:22 a.m. ET Thursday, based on the latest data from CoinMarketCap.