The Bitcoin price experienced significant turbulence as the US and German governments executed transactions involving seized Bitcoin (BTC) holdings, leading to another BTC retracement.
According to market intelligence platform Arkham, the US government has transferred nearly 4,000 BTC, originally seized from drug trafficker Banmeet Singh, to Coinbase. Meanwhile, the German government engaged in substantial Bitcoin transactions, liquidating approximately 2,786 BTC in the early hours of Wednesday.
Bitcoin Price Braces For Potential Impact
As previously reported by Bitcoinist, Banmeet Singh, an Indian national, pleaded guilty to charges related to narcotics trafficking and money laundering in January.
Singh’s “criminal enterprise” reportedly facilitated the sale and distribution of controlled substances through “dark web platforms” such as Silk Road 1, Silk Road 2, Alpha Bay, and Hansa.
The US government wallets deposited 3,940 BTC, equivalent to $241.22 million at current trading prices, to Coinbase. While the move to a centralized exchange (CEX) typically implies selling, it is worth noting that Coinbase also offers custodial services for large institutional investors.
This raises the possibility that the confiscated BTC will be transferred to Coinbase’s custody services for safekeeping, which may not impact the Bitcoin price recovery.
Nevertheless, suppose the first scenario involving the sale of the BTC in question does occur. In that case, the recent influx of BTC to Coinbase and the expected movement of Mt. Gox BTC in early July may impact the market.
However, market expert Adam Cochran suggests that the relatively small amount of BTC sent and the use of Coinbase indicate a slow auctioning process, which could mitigate the potential negative effects on the market and the Bitcoin price.
German Government Joins Liquidation Efforts
In addition to the US government’s actions, the German government continues its efforts to liquidate substantial BTC holdings. Data from blockchain analytics platforms, including Arkham Intel, reveal that the Federal Criminal Police Office (BKA) executed nine transactions involving approximately 2,786 BTC.
The Bitcoin price has already seen a 20% correction over the past week, but as these developments unfolded, BTC dropped to $61,000 from a slight recovery earlier at $62,400.
Despite this, technical analyst Mags highlights the significance of the bull market support band in macro analysis. During previous bull cycles, these bands have served as solid support and resistance.
Interestingly, BTC flipped these bands into support in January 2023, and subsequent tests have resulted in favorable upside continuation. This suggests that while market uncertainty persists due to government liquidations, ongoing technical analysis suggests the potential for a continuation of the macrobullish trend.
Currently trading at $61,000, the Bitcoin price is still down nearly 13% over the month.
Featured image from DALL-E, chart from TradingView.com