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CryptoQuant: Silk Street’s $6.5B Bitcoin reserve unlikely to impact market in the short term if acquired over-the-counter.
CryptoQuant asserts that the US government’s plan to sell $6.5 billion in Bitcoin seized from Silk Road would not have a detrimental impact on the market if conducted through over-the-counter (OTC) desks, according to a report dated January 9.
The Bitcoin (BTC) reserve is currently valued at approximately $6.5 billion, and many have expressed concerns regarding its potential sale and the implications it could have on the overall market.
Silk Road Bitcoin sale
The US Department of Justice (DOJ) was authorized to sell the BTC on January 8. Despite market speculation, the Silk Road Bitcoin reserve remains inactive, with no transactions recorded.
Bitcoin’s decline of 15% from its peak of $108,000 to $92,099.54 as of the time of reporting is among the most significant downturns in the last three months and was largely driven by short-term holders liquidating their positions amid fear.
In the past 24 hours alone, approximately 36,400 BTC have been moved from short-term holders to exchanges, with the Spent Output Profit Ratio (SOPR) dropping below 1. This movement indicates that, on average, these coins were transferred at a loss, which has significantly contributed to the market’s downward pressure.
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As a result, CryptoQuant’s analysis concluded that the potential selling pressure from the Silk Road reserve is minimal in the long term. The firm noted that over the last year, Bitcoin’s realized market capitalization has increased by $381.7 billion, overshadowing the $6.5 billion represented by the Silk Road reserve.
Method of sale
While selling the Silk Road reserve through OTC desks would preserve market integrity in the short term, the firm acknowledged that flooding the spot market with $6.5 billion worth of BTC could lead to significant price corrections.
CryptoQuant’s analysis referenced the German government’s sale of 50,000 BTC in July 2024, which had a noticeable effect on Bitcoin’s price. It added that in the current context, short-term negative volatility depends on how the DOJ proceeds with the sale of the BTC.
Even if the DOJ opts to sell the substantial Bitcoin reserve via crypto exchanges, various on-chain metrics remain stable. CryptoQuant CEO Ki Young Ju pointed out on January 7 that the apparent demand for BTC remains very strong.
Apparent demand is defined as the difference between Bitcoin produced through mining and changes in supply, which refers to the amount that has been inactive for over a year.
Furthermore, he emphasized that Bitcoin is likely to continue on an upward path as long as capital flows into the market, indicating that BTC’s realized cap is currently at its highest levels.
The post Silk Road’s $6.5B Bitcoin stash poses no short-term threat if sold OTC – CryptoQuant first appeared on CryptoSlate.
