19 Jul 2023

U.S. Government coins on the move

Is the second Silk Road batch on its way to the market?
First Batch
On July 13, the U.S. government transferred 8,200 BTC into a series of addresses, all holding 79 BTC. Binance identified addresses received a small portion of the funds, potentially indicating that the second batch of the Silk Road-related bitcoins is about to reach the market.The last batch was sent directly to Coinbase on March 8, with the U.S. government later confirming an in-the-market sale of 9.8k BTC at an average price of $21,856 BTC on March 14. The confirmation date and price conflict with the BTC price for March 14, as BTC traded in the $24,000s on March 14, closing the day at $24,756. As illustrated in Figure 15, the reported sale price better reflects the five-day volume weighted average price (VWAP) of BTC from March 9 to March 14, which indicates that the sale was executed over incremental orders in the period from the Coinbase transfer until the finalization date of March 14. The sale on March 14 deeply impacted the market, coinciding with Celsius-related selling pressure and the early-stage banking turmoil. Now, BTC has experienced a strong continuous bid due to the positive sentiment erupting from the BlackRock ETF application and is better poised to handle sizable selling pressure from the U.S. government. Nonetheless, the second batch of selling could limit BTC’s performance in the short term.
Four batches left to sell, totaling 41,500 BTC
The U.S. government has publicly announced its intention to sell 51.6k BTC related to the seizure of Silk Road-related bitcoins in 2023. The selling is scheduled to occur in five batches, where the first batch was sold in March, reducing the Silk Road Balances to 41,500 BTC. We expected the second batch to be sold in May to even out the selling in bi-monthly batches. We’ve seen no on-chain indications of Silk Road-related coins on the move until July, meaning that the U.S. government is behind our estimated selling schedule. This, in turn, suggests more substantial selling pressure from the U.S. government in the coming months, as the selling will have to occur over a tighter time window, illustrated by our Silk Road selling schedule estimation below.
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