Bitcoin Prices Crash Suddenly, Rumors of US Govt Holdings Being Sold-Off – What’s Going On?

Speculation swirled on Wednesday on whether the US government’s Bitcoin holdings were being sold off in the thousands.

In a tweet, Steven or @Dogetoshi, research director at The Block, found transactions labeled as “Gov: DOJ Confiscated funds.” 

We're nuking because there's an address that was tagged by Arkham as Silk Road moving bitcoins but I'm not sure whether it is accurate.

3HpyXdQp8HnZf8YQxmWQsG4qD9miAkgDTH pic.twitter.com/Yad04ReZ4B

— Steven (@Dogetoshi) May 10, 2023

It then seemed to be a user mistake.

User mistake.

They tagged an address based on Pentoshi's speculative tweet and it alerted them and they forgot it was a manual vs an auto tag.https://t.co/M4q0Xy9e5R

— Steven (@Dogetoshi) May 10, 2023

Crypto veteran Adam Cochran echoed that and said that a user had the wallet tagged on their “own local end as Silkroad, so it wasn’t an Arkham alert that went out to traders/bots.”

“Still could be other news lurking out there,” Cochran said. 

Looking like this isn't what caused the sell-off.

A user had that wallet tagged on their own local end as Silkroad, so it wasn't an Arkham alert that went out to traders/bots. Just an SS that started circulating afterwards.

Still could be other news lurking out there. https://t.co/2l0KJ6c25r

— Adam Cochran (adamscochran.eth) (@adamscochran) May 10, 2023

It wouldn’t have been a first 

The US government sold off more than 9,800 Bitcoin connected to the Silk Road for about $215 million at the beginning of March, according to Blockworks. 

Officials also said they plan to sell 41,500 more Bitcoin in a series of four batches this year, according to the news site. 

Rumors circulated again in late April about the US government’s potential involvement with Bitcoin wallets.

Reports from the blockchain analytics firm Arkham claimed that wallets associated with the now-defunct crypto exchange Mt Gox and the US government had transferred substantial amounts of Bitcoin, according to previous cryptonews.com reporting. 

Arkham CEO Miguel Morel said the wallet activities were not connected, implying that the US was not really responsible for moving or selling Mt. Gox-related assets.

The price of Bitcoin fell steeply at about 1:30 p.m. ET on Wednesday to just under $27,000 from closer to $28,000.

As of Wednesday afternoon, Bitcoin’s price recovered closer to $27,700.