The potential sale of $6.5 billion worth of Bitcoin seized from Silk Road would likely not disrupt the cryptocurrency market if handled through over-the-counter (OTC) trading, according to a new analysis by CryptoQuant.
The U.S. Department of Justice (DOJ) received approval on January 8 to sell the confiscated Bitcoin, sparking concerns about market impact. However, CryptoQuant's research suggests minimal long-term effects if the sale occurs via OTC desks rather than public exchanges.
The analysis points to Bitcoin's substantial growth in realized market capitalization - increasing by $381.7 billion over the past year - which dwarfs the $6.5 billion Silk Road stash. This indicates the market's ability to absorb large sales without major disruption when properly executed.
However, CryptoQuant warns that dumping the entire amount on spot markets could trigger sharp price corrections. The firm referenced Germany's sale of 50,000 Bitcoin in July 2024, which noticeably impacted prices despite being a smaller transaction.
Currently, Bitcoin is experiencing a 15% decline from its recent all-time high of $108,000, trading at $92,099.54. This downturn appears driven by short-term holders selling in panic, with approximately 36,400 BTC moved to exchanges at a loss in the past 24 hours.
Despite these short-term fluctuations, CryptoQuant CEO Ki Young Ju maintains an optimistic outlook, citing strong apparent demand - measured as the difference between mining production and long-term holding patterns. The CEO notes Bitcoin's realized capitalization remains at historic highs, suggesting sustained market strength regardless of the DOJ's eventual selling strategy.
The Silk Road Bitcoin cache currently remains dormant with no recorded movements, as market participants await the DOJ's decision on how to proceed with the sale.