Bitcoin Could See More Price Decline As Silk Road BTC Moves To Coinbase
Bitcoin has once again dipped below the $22,000 price level after a particularly slow start to the week. This is in line with the previous downtrend that was triggered after the digital asset rejected at the $25,000 resistance. However, this does not seem to be the end of the pain for cryptocurrency investors, as some moves could point to a further price drop in the market.
BTC Seized by US Government Moves to Coinbase
In the early hours of Wednesday, it was revealed that the US government had started moving some significant amounts of bitcoin that had been seized from various criminals. There were around 40,000 BTC in total moved by the US government, which were flagged by on-chain data aggregator Glassnode as internal transactions. However, more than 20% of the fund was transferred to the centralized cryptocurrency exchange Coinbase.
Glassnode’s report pointed to 9,861 BTC being sent to the exchange, all seized from the infamous Silk Road hacker. The value of these coins at the time of writing has reached 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 of wallets associated with seizures by US government officials are on the move.
Of these, the majority appear to be internal transfers (so far), however approximately 9,861 $BTC seized from the Silk Road hack were sent to our Coinbase cluster. pic.twitter.com/afuEYcV18L
— glassnode (@glassnode) March 7, 2023
Interestingly, some of these coins are nearly a decade old after the Silk Road market crashed, and some of the coins were later sold at auction. Given that these coins haven’t moved in a long time, this has sparked speculation as to why it’s moving now and why they’re being sent to the Coinbase cluster identified by Glassnode.
What this could mean for Bitcoin price
Now, when currencies are moved to centralized exchanges, it is usually for selling, as investors take advantage of the deeper liquidity these CEXs offer. However, that cannot be the only reason large amounts of BTC have been moved to the trading platform.
Another service Coinbase offers is an escrow service that helps large institutional investors protect their coins. Therefore, there is also a possibility that coins will be moved to Coinbase escrow services for escrow.
BTC price holding above $22,000 | Source: BTCUSD on TradingView.com
However, if the former is the case, the market will definitely feel the effects of large volumes of BTC pouring into the market. Coupled with the fact that Mt. Gox BTC should also be on the move, these high levels of selling pressure could easily push bitcoin price below $20,000.
However, the price of the digital asset is still above $22,000, which is good for now, but it is trading below the 20-day moving average. This points to a reluctance of investors to enter the digital asset, at least in the short term. Thus, there is not enough buying pressure to absorb the possible supply flow in the market.