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Bitcoin Price Plummets As US Government Transfers $2B In Seized Silk Road BTC, Coincidence?

The crypto market is abuzz with speculation as the US government recently moved significantly regarding seized Bitcoin (BTC) linked to the infamous Silk Road dark web marketplace. This development comes at a critical time for the Bitcoin price, which has struggled to maintain its position above the $70,000 threshold after hitting its current all-time high (ATH) of $73,700 on March 14. 

As the largest cryptocurrency experiences yet another round of price correction, the movement of these seized funds has triggered intense speculation about a potential sell-off by the US government.

Seized Silk Road BTC On The Move

According to on-chain data, a wallet linked to the US government recently transferred 30,175 Bitcoin, seized from the Silk Road dark web marketplace. 

This transfer follows the earlier seizure of over 50,000 Bitcoin from James Zhong, who illegally obtained the cryptocurrency from the Silk Road in 2012. The US Department of Justice’s (DOJ) seizure of these funds marked the largest cryptocurrency seizure in its history.

Bitcoin price

This is not the first instance of the US government moving Bitcoin obtained from criminal cases. In March 2022, the government sold 9,800 Bitcoin, with plans to sell an additional 41,500 BTC. However, the recent transfer of the 30,175 BTC from Silk Road-related addresses has raised questions about the fate of these funds and their potential impact on the Bitcoin price correction. 

Benjamin Skew, an on-chain data expert, took to social media to offer insights into the situation. Skew clarified that although there is chaos surrounding the Silk Road Bitcoin being sent to Coinbase for sale, a closer examination reveals that the main funds were transferred to a newly created wallet that remains inactive. 

However, Skew stated that 2,000 BTC of the total amount was transferred to the alleged Coinbase wallet for undisclosed purposes, while the rest was sent to a newly created wallet. 

200EMA Support Crucial For The Bitcoin Price

The Bitcoin price is currently witnessing a lack of bullish momentum as the cryptocurrency continues to face resistance in consolidating above the crucial $70,000 threshold. However, there is still hope on the horizon. 

Crypto analyst Ali Martinez highlights the importance of the 200-epimetric moving average (EMA) on the 4-hour chart of BTC. According to Martinez, this indicator has acted as formidable support since early February and continues to play a crucial role in preventing further downward movement. 

The focus on the 200EMA stems from its potential to either catalyze a rebound or trigger more losses for Bitcoin. Martinez stated that if the 200EMA continues to hold as strong support, it signifies a significant probability of a price rebound. This scenario would provide renewed bullish momentum and potentially propel Bitcoin’s price above the $70,000 mark. 

However, if the 200EMA is broken, as it was in mid-January, as seen in the chart below, the analyst suggests that this could expose the Bitcoin price to further downward pressure and potentially lead to further losses.

Bitcoin price

Bitcoin (BTC) is trading at $65,390, continuing its recent price correction. Over the past 24 hours, BTC has experienced a 5% decline; over the past seven days, it has seen a significant drop of over 6%. 

The market closely monitors whether the current key support level can sustain further price drops or if a potential bounce will occur before reaching that point. The outcome of these scenarios remains uncertain. 

Featured image from Shutterstock, chart from TradingView.com 

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$130M Silk Road Bitcoin Stash To Be Sold By US Government

Since mid-January Bitcoin (BTC) has been facing mounting selling pressure from various market players. This includes asset manager Grayscale, bankrupt crypto exchange FTX, and now, the US government, which is set to auction off a substantial amount of Bitcoin seized from the infamous dark web marketplace Silk Road.

Sale Of Confiscated Silk Road Bitcoin

The US government has filed a notice to sell approximately $130 million worth of Bitcoin confiscated from Silk Road. The filing states that the United States intends to dispose of the forfeited property as directed by the United States Attorney General.

Individuals or entities, except for the defendants in the case, claiming an interest in the forfeited property must file an ancillary petition within 60 days of the initial publication of the notice. 

Once all ancillary petitions have been addressed or the filing period has expired, the United States will obtain clear title to the property, enabling them to warrant good title to subsequent purchasers or transferees.

The ongoing selling pressure on BTC has resulted in a sharp 20% correction over the past 10 days. This trend is expected to continue and further amplify the selling pressure. Adding to the situation, asset manager Grayscale, while slowing down its selling activities, continues to transfer a significant amount of Bitcoin to Coinbase. 

Bitcoin

According to data from Arkham Intelligence, Grayscale recently sent an additional 10,000 BTC worth $400 million to Coinbase. 

Since the approval of the Bitcoin spot exchange-traded fund (ETF), Grayscale has deposited a total of 103,134 BTC ($4.23 billion) to Coinbase Prime. Currently, Grayscale holds 510,682 BTC ($20.43 billion).

Ideal Buying Opportunities? 

Adam Cochran, a prominent market expert, has provided insights into the recent price action and the expectations of Bitcoin buyers. Cochran highlights that aggregate open interest (OI) for BTC has decreased by 17% from recent highs but remains around 20% higher than the averages observed during more stable market ranges. 

Cochran notes that the market has seen attempts to catch falling prices, suggesting a mix of “sophisticated” and leveraged buyers.

Cochran further observes that retail investors are driven by narratives surrounding the ETF and halving events, leading them to buy dips on leverage. However, many investors remain unconvinced about the market’s direction and are waiting for a clear entry point, according to Cochran’s analysis. 

Notably, Cochran highlights that the current funding rates do not indicate a bearish sentiment, even in options trading, suggesting an expectation of a bottom formation shortly.

The market’s dynamics are influenced by emotions and probabilities, and Cochran believes that too many participants are overexposing themselves emotionally by trying to catch the bottom of the market on each dip. 

This behavior has increased the likelihood that the recent price action may not mark the bottom yet. Cochran suggests that a sentiment reset, a decline in the 3-month annualized basis by around 25%, and a further decrease in open interest would provide a healthier environment for major plays in the market.

Ultimately, Cochran emphasizes the need for a reset in expectations, highlighting that a period of doom and despair is necessary for market participants to reassess their positions. 

Cochran points out that a range between $35,000 and $37,000 BTC could be a suitable level for larger spot buys in the longer term. However, Cochran also notes that a potential drop to the $28,000 to $32,000 range could provide ideal conditions for confident, leveraged deployment.

Bitcoin

Currently, BTC is trading at $39,800, up a slight 0.6% in the past 24 hours, but down over 14% in the past fourteen days.

Featured image from Shutterstock, chart from TradingView.com

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Bitcoin Thief’s Decade-Long Heist: Solving The Mystery Of The Stolen Silk Road BTC

In 2012, a staggering 50,000 Bitcoin (BTC) were stolen from the infamous Silk Road, an illicit dark web marketplace. Over the years, the value of the stolen BTC skyrocketed to $3 billion, making it one of the most significant mysteries in cryptocurrency.

However, nearly a decade later, a critical mistake by the thief led to a breakthrough in the case, allowing the IRS-CI (Internal Revenue Service Criminal Investigation) to crack the puzzle. 

CNBC has obtained exclusive footage that reveals how investigators meticulously connected the dots, ultimately leading to the unmasking of the perpetrator behind the Bitcoin heist.

Silk Road Bitcoin Heist Unraveled

The story begins in Athens, Georgia, an unsuspecting college town familiar with typical misdemeanors. On the night of March 13, 2019, 28-year-old Jimmy Zhong, a local computer expert, made an unusual 911 call to report the theft of hundreds of thousands of dollars’ worth of Bitcoin from his home. 

Per the report, the investigation into the theft from Zhong’s residence initially yielded no suspects. The Athens-Clarke County Police Department, inexperienced in crypto-related cases, struggled to make headway. 

In a quest for answers, Zhong sought the assistance of local private investigator Robin Martinelli. Although not well-versed in cryptocurrencies, Martinelli was determined to crack the case.

Martinelli meticulously examined Zhong’s extensive home surveillance system and stumbled upon a crucial piece of evidence—a slender figure captured in the footage from the night of the crime. 

Little did Zhong know that while reporting his stolen Bitcoin, a team of IRS agents worked tirelessly to solve the 2012 Silk Road hack.

However, the hacker’s identity remained concealed until a tiny slip-up occurred. In September 2019, the hacker mistakenly transferred around $800 worth of BTC to a cryptocurrency exchange that adhered to established banking regulations, including “know your customer” procedures.

To the investigators’ surprise, the account used for the transaction was registered in Jimmy Zhong’s name, linking him to the stolen Silk Road funds. The IRS contacted the Athens-Clarke County Police Department, seeking collaboration to build a solid case against Zhong.

United by a shared objective, Lt. Jody Thompson, IRS-CI special agent Trevor McAleenan, and Shaun MaGruder, CEO of cyber intelligence company BlockTrace, formed a team. 

Armed with evidence, they obtained a federal search warrant for Zhong’s residence. On November 9, 2021, a large team of officers raided Zhong’s home, delivering the shocking news that he was the prime suspect.

From Creator To Thief?

Investigations revealed that Zhong, an early coder allegedly involved in the development of Bitcoin since its inception in 2009, had played a role in perfecting the technology. 

In an ironic twist, a hacker involved in the creation of Bitcoin had transformed into one of the most prominent BTC thieves in history. Zhong was charged with wire fraud, pleaded guilty, and received a sentence of one year and a day in federal prison, starting on July 14, 2023.

Zhong could not retain the illicit funds despite his immense fortune in stolen BTC. The US government seized the assets, initiating a process for victims of the Silk Road hack to reclaim their lost Bitcoin. 

However, no claimants came forward, and the government sold the seized Bitcoin, with the proceeds likely to be shared with the Athens-Clarke County Police Department as a token of appreciation for their assistance.

In his statement to the judge, Zhong admitted that the stolen Bitcoin had made him feel important, but ultimately, his actions had only benefited the government financially.

While the original crime of the Bitcoin theft from Zhong’s Athens residence remains unsolved, the arrest and conviction of Zhong have brought closure to one of the most significant cryptocurrency crimes of our time.

Bitcoin

Featured image from Shutterstock, chart from TradingView.com