In November 2020, the US government seized over 69,000 Bitcoin from Silk Road’s wallets.
At the time, it was the largest seizure of BTC of all time in terms of dollar value: over one billion.
Today those over 69,000 BTC would be worth more than 45 billion dollars.
Summary
USA: The movement of Silk Road’s Bitcoins yesterday
Yesterday, a total of 30,174 BTC of those seized from Silk Road in 2020 have been moved.
However, this is not the first time it happens, because already last July there were some movements.
However, this time it is a truly significant amount, equivalent to almost 20 billion dollars in value, following the official news released in January regarding the intention to sell them.
However, in January the official press release only referred to just under 3,000 BTC, while yesterday 30,000 were moved.
This discrepancy, along with another factor that needs to be taken into consideration, make the hypothesis of the sale a bit doubtful.
Indeed, usually when the US Department of Justice proceeds with the sale of seized assets such as BTC, it does so through auctions during which lots are put up for sale to the highest bidder.
It is highly unlikely that the lot is made up of 30,000 BTC, because there are very few people who could have 20 billion dollars in cash to buy it.
It is no coincidence that the press release in January mentioned the intention to sell just under 3,000 BTC, probably divided into several smaller lots, since even a single auction with 3,000 Bitcoins for sale could have gone unsold due to the high cost.
The seizure against Silk Road
Silk Road was an e-commerce website that operated on the dark web, protected by anonymity services like Tor.
It hosted for sale various contraband products, or even illegal ones, and sometimes Bitcoin was used for payments. Bitcoin.
The site was born in 2011, two years after Bitcoin, and was closed by authorities in 2013. Although it managed to reopen after the seizure, it was then permanently closed the following year.
2013 was also the year of the first major speculative bubble of BTC, with its price going from about $10 to over $1,000 in approximately 12 months.
In 2013, US authorities arrested the founder of Silk Road, Ross Ulbricht, and later continued their investigations until 2020 when they reached the seizure of a portion of the Bitcoins accumulated in Silk Road’s wallets.
It should be noted that at the beginning of 2011 the market value of 1 BTC was less than 1$, although during that year the first speculative bubble in its history inflated it up to 25$, which then burst with the price dropping back below 5$ the following year.
So it’s no wonder that Silk Road in that very 2011 managed Bitcoin transactions totaling over 9 million BTC.
Obviously, a portion of the BTC traded ended up in the platform’s coffers as sales commissions.
US government sells seized Bitcoin from Silk Road
The DEA (Drug Enforcement Administration), the agency of the US Department of Justice that investigates drug trafficking, was the one to bust Silk Road. In fact, many of the transactions that took place on Silk Road were related to illegal drugs and narcotics.
Already in 2013, about 10,000 BTC were seized, which at the time had a market value of about one million dollars.
Subsequently the FBI intervened, seizing another 26,000. By the end of the year, a total of 114,000 BTC had been seized.
These Bitcoins have already been sold at auction by the US Department of Justice in the following years, but in 2020 another 69,000 were seized.
Although this second seizure, which occurred seven years after the first one, brought a lower number of Bitcoins into the Department of Justice’s coffers, in the meantime the market value of BTC had risen significantly, so that at the time of the seizure those 69,000 BTC were worth more than a billion dollars.
The BTC seized in 2020 have not yet been sold, but apparently they could be sold soon.
The impact on price
If 69,000 BTC were put up for sale on the market all at once, such a sale would certainly have the power to significantly lower the price of Bitcoin.
But this will not be the case, because since the amount is significant, the Department of Justice will surely proceed with different sales at different times.
The hypothesis was that it would start with a sale of about 3,000 BTC, but yesterday’s move suggests they may want to sell more.
It is worth noting that Grayscale’s ETF (GBTC) has liquidated a total of 290,000 BTC in less than three months, with virtually no impact on the price.
However, it should be added that he did so almost constantly over a period of three months, more or less every weekday, and that indirectly those BTC were then repurchased by the new Bitcoin ETFs, such as those of BlackRock and Fidelity.
These numbers show that the impact on the price of Bitcoin from the sale of BTC by the US Department of Justice could be there, but it could also not be particularly significant if done over time in small batches.
For example, 3,000 BTC is precisely the average size of GBTC sales.
 seized from Silk Road in 2020 were moved by the US Department of Justice.){kind=link}