CryptoQuant believes the US government selling $6.5 billion in Bitcoin confiscated from Silk Road would not have an adverse impact on the market if sold via over-the-counter (OTC) desks, according to a Jan. 9 report.
The Bitcoin (BTC) stash is currently worth roughly $6.5 billion, and many have raised concerns about its potential sale and the effects it would have on the wider market.
Silk Road Bitcoin sale
The US Department of Justice (DOJ) was cleared to sell the BTC on Jan. 8. Despite market speculation, the Silk Road Bitcoin stash remains dormant, with no movement recorded.
Bitcoin’s 15% fall from its all-time high of $108,000 to $92,099.54 as of press time is one of the worst drawdowns in the past three months and was primarily driven by short-term holders selling amid panic.
In the past 24 hours alone, approximately 36,400 BTC were transferred from short-term holders to exchanges, with the Spent Output Profit Ratio (SOPR) falling below 1. The movement indicates that, on average, these coins were moved at a loss, which has contributed significantly to the market’s downward pressure.
As a result, CryptoQuant’s analysis pointed out that the potential selling pressure from the Silk Road stash is negligible in the long term. The firm noted that over the past year, Bitcoin’s realized market cap has increased by $381.7 billion, dwarfing the $6.5 billion the Silk Road stash represents.
Method of sale
Although selling the Silk Road stash through OTC desks would maintain the market integrity in the short term, the firm acknowledged that dumping the $6.5 billion worth of BTC on the spot market could cause severe price corrections.
CryptoQuant’s analysis cited the German government’s sale of 50,000 BTC in July 2024, which had a noticeable impact on Bitcoin’s price. It added that in the current scenario, short-term negative volatility depends on how the DOJ sells the BTC.
Even if the DOJ decides to sell the substantial Bitcoin stash using crypto exchanges, various on-chain metrics remain solid. CryptoQuant CEO Ki Young Ju noted on Jan. 7 that BTC’s apparent demand remains very high.
Apparent demand is the difference between Bitcoin production through mining and changes in inventory, which refers to the supply being inactive for over a year.
Additionally, he highlighted that Bitcoin will remain on an upward trajectory as long as capital flows into the market, indicating that BTC’s realized cap is currently at its highest levels.
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