Bitcoin In Question As US Government Transfers 10k BTC To Coinbase

(August 14, 2024 - Jordan Finneseth)

(Kitco News) – New data from Arkham Intelligence shows that the U.S. government has transferred 10,000 Bitcoin (BTC) worth approximately $590 million to a Coinbase wallet, worrying some market watchers that another price dump is imminent.

Arkham’s data shows that the U.S. Department of Justice still possesses more than 203,000 BTC, valued at approximately $12 billion, making it the largest national holder of Bitcoin globally.

The subject of the government’s BTC holdings has been a popular topic of late after Presidential candidate Donald Trump promised to make Bitcoin a strategic reserve asset, vowing that he wouldn’t sell the Bitcoin currently held by the government – and instead would implement procedures to buy more.

“Many Americans do not realize that the U.S. government is among the world's largest holders of Bitcoin – The Federal Government has almost 210,000 Bitcoin or 1% of the total supply that will ever exist,” Trump said. “But for too long, our government has violated the cardinal rule that every Bitcoiner knows by heart: "NEVER SELL YOUR BITCOIN."

“And so, as the final part of my plan today, I am announcing that if I am elected, it will be the policy of my administration to KEEP 100% of all the Bitcoin the U.S. government currently holds or acquires in the future,” he pledged. “This will serve, in effect, as the core of a Strategic National Bitcoin Reserve.”

Wednesday’s transfer of 10,000 BTC seems to fly in the face of that promise, though some have noted that the transfer could be for custody purposes as Coinbase recently revealed that the “U.S. Marshals Service (USMS), a division of the U.S. Department of Justice, selected Coinbase Prime as its partner to safeguard and trade its “Class 1” (large cap) digital assets.”

The majority of the government’s Bitcoin reserves were accumulated through law enforcement actions, including the seizure of approximately 174,000 BTC from the Silk Road marketplace, and they have regularly auctioned off batches of their holdings over the years, a move which many have called short-sighted as the value of Bitcoin is expected to rise.

This latest move follows the transfer of $241 million worth of Bitcoin in late June, followed by a larger transfer worth $2 billion in late July. The increasing pace of transfers has many concerned that a major sell-off is coming, which has led to weakness in Bitcoin’s price on Wednesday.

It remains to be seen whether the government plans to sell the recently transferred Bitcoin, or if they are simply going through the necessary steps to transfer their holdings into Coinbase custody.

Concerns about the effect of a large amount of Bitcoin being dumped on the market remain high after the German government offloaded 50,000 BTC over several weeks in early July, which coincided with Bitcoin’s price falling from $64,000 to $53,500.