A Potential Bitcoin Crash in 2023? What to Expect
The world of crypto is currently standing firm, with new massive coins such as Worldcoin being launched recently, with a promising future and reliable backing. The currency is going to be the hot topic of conversation for the near future, with many newcomers being interested in the Crypto market.
While it is true that navigating the said market could be quite complicated these days, due to its size, popularity, and volatility. Luckily, there are plenty of tools that provide help with cryptos, which make navigating through the world of crypto trading easier, as they help you understand both the rewards and risks of cryptocurrency trading.
Nearly 10 thousand BTC, worth over 300 million US Dollars, belonging to the US government was tracked to be on the move, leading to speculation amongst people about whether or not they are planning to sell their entire stock of the coin. Below we will go over how much this would affect the market, the most likely motive behind the move, as well as how much BTC the US government actually possesses.
What we are going to learn?
The Governments Bitcoin Investment
The US government is currently one of the largest Bitcoin whales on the planet. As one would guess though, the exact number of BTC in their possession is unknown. Based on Glassnode’s Onchain analysis, the balance history of US BTC, tracks back to November 2020, and was rising until March 2023.
Many might recall the month of March, considering it was quite significant for those who had an investment in BTC. The price of the coin plummeted below 20 thousand dollars, and more than a total of 70 billion dollars was wiped off the market. This event is largely believed to be caused by the US government selling a portion of their Bitcoin, dropping their possession from the rough all-time high of 240K, to 194K, which is the bare minimum that they own today.
People are currently concerned that if selling 50K Bitcoin had such drastic consequences for the coin, selling all of it may crash it altogether, after all 200 thousand BTC roughly translates to 5.6 billion dollars, and the coin’s price has been on a slight decline even prior to this.
How the US Government Came to Own BTC
This may be surprising, but most of the Bitcoin owned by the US has been confiscated in three major cases. The biggest singular one is the 94k BTC seizure from Ilya Lichtenstein and his wife Heather Morgan, and two next that follow are individual cases both concerning the now shut down Silk-road. Considering countless other smaller scale confiscations, many believe the total seizes to cap at 500K Bitcoin, but since it cannot be reliably verified, it remains to be only speculation.
The BTC sales and Market Effects
The US government’s BTC selling activities are not quite clear cut. We can look at a recent Forbes article that suggests that the US has sold over 190 K BTC it has ever seized/confiscated. However, it also notes that the government only ever seized the total amount of 270K Bitcoin, leaving it with a current balance of 80K, which we know is not true due to the Galssnode analysis.
The only concrete info available to the public is the 2014-15 selling of around 140K BTC. There were notable buyers and crypto millionaires that received the BTC, including Tim Draper. There is also the notable information that the BTC was auctioned at a significantly lower price of 343 USD, which is quite surprising considering its actual market price at that time.
Of course after this there was the above-mentioned decline in total BTC owned ever since march 2023, leading to the current events which sparked this conversation in the first place, the moving of 10K BTC.
As to how these sales may affect the crypto market, it may depend on several variables. Most notably, whether or not the selling is happening OTC (over the counter), or in exchange. There is a major difference between the two, as OTC is a trade directly happening between two parties, with both getting equal value, and in theory, not fluctuating the price. The latter method refers to a more centralized trade, with the exchange acting as the intermediary.
However, when dealing with an all-time low market depth as we have in the industry today, massive purchases and trades still have a huge impact on the coins. Consider the fact that the government does not mind selling BTC at huge discounts, as they proved in 2014 when they sold Bitcoin at roughly 50% less than the market price at the time, and we have a potential BTC crash, depending on what the government decides to do.
Now the potential motives of the US government are pretty clear. Many people are becoming aware that the crypto currencies can be rivals to actual National currencies given time. It is likely for the governments to have a desire to eliminate all potential competition towards their established currencies, or perhaps substitute the decentralized currencies with more controllable ones, such as stable coins. Of course, at the end of the day, all we can do is wait and see the future developments.