Bitcoin once again slid below the $22,000 price level following a particularly slow start to the week. This falls in line with the previously bearish trend that was triggered after the digital asset was rejected at the $25,000 resistance. However, this does not seem to be the end of the pain for crypto investors as some movements could point to a further price decline in the market.
BTC Seized By U.S. Government Moves To Coinbase
In the early hours of Wednesday, it was revealed that the U.S. government had begun moving some significant amounts of bitcoin that were seized from various criminal parties. There were around 40,000 BTC in total moved by the U.S. government, which were flagged by on-chain data aggregator Glassnode, to be internal transactions. However, more than 20% of the fund were moved to the centralized cryptocurrency exchange, Coinbase.
The report from Glassnode pointed to 9,861 BTC being sent to the exchange, all of which were seized from the infamous Silk Road hacker. The value of these coins at the time of writing came out to approximately $21.7 million at current prices. But in total, the value of the 40,000 BTC being moved was valued at around $1 billion at the time.
Approximately 40k $BTC from wallets associated with US Government law enforcement seizures are on the move.
— glassnode (@glassnode) March 7, 2023
Interestingly, some of these coins are almost a decade old following the takedown of the Silk Road marketplace, and some of the coins were subsequently sold at auction. Given that these coins haven’t moved in a long time, it has sparked speculation as to why it is moving now and why they are being sent to the Coinbase cluster identified by Glassnode.
What This Could Mean For Bitcoin Price
Now, when coins are moved into centralized exchanges, it is usually to sell, as investors take advantage of the deeper liquidity these CEXes offer. However, this could not be the only reason why such large amounts of BTC were moved to the trading platform.
Another service that Coinbase offer is a custodial service that helps large and institutional investors to safeguard their coins. So there is also the possibility that the coins are being moved to Coinbase’s custodial services for safekeeping.
BTC price holding above $22,000 | Source: BTCUSD on TradingView.com
However, if the former is the case, then the market will definitely feel the effects of such large volumes of BTC being dumped on the market. Coupled with the fact that the Mt. Gox BTC is expected to be on the move as well, such high levels of selling pressure can easily push the price of bitcoin below $20,000.
Nevertheless, the price of the digital asset is still holding above $22,000, which is good for now but it is trading below its 20-day moving average. This points toward a reluctance for investors to enter the digital asset, at least for the short term. Thus, there is not enough buying pressure to soak up the possible influx of supply into the market.