Supreme Court refuses to hear case related to Bitcoin seized from Silk Road. This decision paves the way for the government to sell that bitcoin. The sale will likely be higher than that from the German government and Mt Gox's creditors, a potential drag on Bitcoin's price. .
Markets tumbled after the US Supreme Court on Monday declined to hear a case involving 69,000 bitcoins held by the US government.
Investors ignore the decision at their peril.
“I see this as similar to what happened with Mt. Gox,” said Brian Rudick, managing director of crypto market maker GSR Research. News.
That's because the government is willing to sell the bitcoin it seized when it shut down the infamous dark web marketplace Silk Road.
“People may not be paying much attention now, but the more this story picks up, or the more people actually see the US government sell it,” Ruddick said, “that could cause a nice downward draft in the markets.”
While some have questioned whether the US is allowed to sell seized bitcoin, Ruddick believes the Supreme Court's decision is likely to remove any barriers to a fire sale. analysis From Scott Johnson, general counsel at Van Buren Capital.
That's Bitcoin the value More than $4.2 billion at Wednesday's prices, this year the German government and Mt. Gox exceeded the amount sold by creditors.
“Bitcoin is down almost 20% [2024] It peaked at one point in June,” Ruddick said. “I think the main driver was the impending Mt. Gox distribution. You also had the German selloff. You also had the hawkish Federal Reserve at that time.
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BitGet Research chief analyst Ryan Lee said the sell-off could lead to short-term volatility. But that depends on how the government chooses to sell crypto.
“If the sale is phased, the market can gradually absorb this batch of bitcoins,” he said.
“As the Bitcoin market matures, more institutional investors and hedge funds may join and have the ability to handle such sales.”
To be sure, there are other factors that will encourage Bitcoin in the coming weeks and months.
Among them are rising liquidity worldwide, the US election and distribution of up to $16 billion to FTX creditors.
The November 5 election is considered a crossroads for the broader crypto industry.
Republican presidential candidate Donald Trump, once a critic, has embraced crypto and some of its pet causes. He promises to create a “national bitcoin stockpile” and pardon the founder of Silk Road Ross UlbrichtHe is currently serving a life sentence for conspiracy to commit drug trafficking, computer hacking and money laundering, among other crimes.
Meanwhile, Trump's rival, Democratic Vice President Kamala Harris, has largely avoided the issue, but prominent supporter Mark Cuban has insisted she takes a softer approach than President Joe Biden.
But Ruddick said there are three reasons why Harris' victory in November is also good for crypto.
“One, there's a lot of uncertainty in the markets right now, and even if she wins, it will remove that uncertainty,” he said.
“Number two, I think she will be friendlier than the current administration. And then number three, the price of Bitcoin is actually low [today] than when politicians began to embrace it.”
Before Trump began his courtship of the crypto industry, Bitcoin hit an all-time high of $73,000 in March.
In addition, Rudick said the $8 billion returned to FTX creditors could be reinvested in crypto.
But market research firm K33 is less optimistic.
K33 said in a research note published on Tuesday that less than a fifth of the expected payment could be used to buy crypto.
“We expect $2.4bn of latent demand from FTX reallocators after the bankruptcy repayment process, which will unfold in several waves throughout next year,” K33 analysts wrote, “and its overall impact on the crypto market may be softening.”
Alex Gilbert News'Diffie correspondent from New York. You can reach him at [email protected].
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