Sitting on $5.7 Billion in Bitcoin! Will the Whale-Like U.S. Government Sell, Potential Selling Pressure, or Strategic Holding?

This morning, a wallet address related to the Silk Road case experienced a small Bitcoin transfer, leading to speculation that it may also be under the control of the US government. However, the transfer utilized the Replace-By-Fee (RBF) feature, which increased both the transaction fee and the transaction amount, marking it as an unusual behavior. In addition, the $5.7 billion worth of Bitcoin held by the US government is also drawing significant attention.

The U.S. Government Emerges as a Bitcoin Whale, Every Move of the Wallet Draws Attention

According to The Block, in the early hours of today, a wallet starting with bc1qzd8c transferred 10 bitcoins to another wallet while sending 1,490 bitcoins to another change wallet.

It is understood that this address had received funds back in April 2022 related to James Zhong, who was convicted in the Silk Road black market case for stealing bitcoins, and his multiple wallet transfers. At that time, James Zhong's funds were already under the management of the U.S. government.

Although the owner of the bc1qzd8c wallet remains unknown, multiple cryptocurrency data analysis platforms including Glassnode and Arkham have now tagged it as controlled by the U.S. government. Arkham further explained that the funds were subsequently sent to wallets associated with cryptocurrency exchanges Coinbase and Gemini.

It is worth noting that this transfer used the Replace-By-Fee (RBF) feature, increasing the transaction fee and amount in an attempt to prioritize miner approval, which is seen as an abnormal sign.

On April 26, a warning about the U.S. government selling some bitcoins, later confirmed to be a mistake, caused a drastic price fluctuation for bitcoin with a range of 27,300 to 30,000 on that day, a single-day high-low price fluctuation of 9.8%, indicating that every move of the U.S. government is currently under close scrutiny.

The U.S. Government's Bitcoin Holdings: Habitual, Not Strategic

Despite the recent crackdown on cryptocurrency companies by the U.S. government, it is interesting to note that the U.S. is gradually acquiring approximately 207,000 bitcoins through criminal seizures, worth around $5.7 billion, making it the largest government holder of bitcoins globally, joining the ranks of Bitcoin whales.

Referring to Elementus data cited by Forbes, the table below shows the flow of countries holding bitcoins from 2013 to 2022, with most assets coming from government seizures, and the U.S. clearly leading other countries at that time.

Upon further analysis, some believe that the U.S. holding bitcoins is a hedge against inflation strategy. However, considering the hundreds of billions of dollars on the U.S. government's balance sheet last year, a $5 billion bitcoin reserve seems to have little hedging benefit.

Attorney Leslie Sammis stated, "The sale of seized assets is not mandatory or immediate. They may have made a decision, but there needs to be some legal or policy framework to start transferring these assets."

In addition, Genesis Trading's Head of Trading Gordon Grant, in an interview with The Block, explained:

"Perhaps the U.S. government is simply doing what central banks in emerging markets often do: trying to influence its price or provide liquidity to an imbalanced market. But many are already monitoring and considering responses."