According to the recent X post by Blockstream CEO Adam Back, the US Government offloading its Bitcoin stack is good for long term HODLers.
Bitcoin (BTC) has recently become the topic of controversy, with reports that the US government has begun the process of selling 30,000 BTC seized from Silk Road. In a post on X, Adam Back, co-founder and CEO of Blockstream stated that such sales could potentially be beneficial for long-term Bitcoin holders, widely known as “HODLers”.
Adam Back’s View Point on the Bitcoin Sales
Notably, hodlers refers to long-term investors who buy and hold cryptocurrencies regardless of the price. By using the “hodling” strategy, investors can profit from long-term value appreciation while avoiding losses due to the short-term volatility of cryptocurrencies.
According to Back, the US government’s Bitcoin sales might become beneficial to Bitcoin hodlers if the government sell and print more USD in the future. He jokingly admitted that he would have hodled Bitcoin himself, implying that anyone who did so would have benefited from the government’s decision.
hehe good point. should’ve hodled. but better for bitcoiners if they sell and then print more USD later. they know they want to. well basically have to at this point.
— Adam Back (@adam3us) April 2, 2024
Back appears to suggest that, while the immediate effect of the government selling Bitcoin may cause market swings, the infusion of fiat currency arising from such sales might potentially contribute to inflationary pressure. As a result, Bitcoin’s value as a hedge against currency devaluation may rise.
However, another X user offered an alternative viewpoint on the Bitcoin sales, speculating that the government might be keeping the price low or using it to support some authorized Exchange-Traded Funds (ETFs) participants. The Spot Bitcoin ETF products went live in January this year.
It is worth noting that this is not the US government’s first attempt to sell the confiscated Silk Road Bitcoin. In January, the US government filed a notice to sell nearly $130 million worth of Bitcoins in two lots under the direction of the US Attorney General.
The Silk Road Bitcoin Seizure
Silk Road was a digital black market network known for hosting money laundering and illegal drug transactions including Bitcoin. The FBI shut down the site permanently, seized more than 144,000 BTC, and arrested numerous users, including the site’s founder, Ross Ulbricht, who earned around $80 million in commissions from transactions conducted on the site.
On two separate occasions, the US government seized Bitcoin holdings tied to the Silk Road marketplace. The first lot was seized on February 10, 2021, in Memphis, Tennessee, followed by another seizure on May 11, 2021, in Arlington. On January 8, 2024, the District Court in Maryland finalized the seized Bitcoin’s forfeiture to the US government.
As of December 2023, the US government-owned around $9 billion worth of Bitcoin. However, this figure includes Bitcoins from a variety of sources, as well as seizures tied to the Silk Road.
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