Bitcoin Magazine CEO David Bailey hinted that the U.S. Department of Justice (DOJ) might be secretly selling Bitcoin seized from the Silk Road case, possibly causing the recent market drop.
In a March 10 post on X, Bailey hinted that despite former President Donald Trump’s pro-Bitcoin stance, the DOJ may have already begun selling its confiscated BTC. The timing has raised alarms as Bitcoin dropped 7% in a single day, falling to $80,052.
While some dismiss the idea that the DOJ’s holdings are large enough to significantly move the market, others argue that government-controlled Bitcoin reserves remain a wildcard in an already volatile financial landscape.
Bailey’s concerns stem from a December 2024 court ruling that granted the DOJ permission to sell 69,370 BTC linked to Silk Road. Historically, the government has auctioned off seized Bitcoin in large tranches, but the lack of transparency around the timing of these sales has fueled speculation.
Bailey fanned the flames when, in response to a question about stopping DOJ sales, he cryptically replied:
“Working on it.”
Though no official confirmation has surfaced, the coincidental Bitcoin sell-offs and the DOJ’s legal clearance to liquidate assets have traders on edge.
Beyond DOJ Sales
Bitcoin’s recent slide isn’t just about potential DOJ sales. Analysts point to macroeconomic pressures such as:
- Rising Treasury bond yields, which have historically pressured risk assets like Bitcoin.
- Upcoming inflation reports (CPI on March 12, PPI on March 13), which could signal Federal Reserve policy shifts.
- Institutional positioning ahead of major ETF inflows, as funds rebalance and hedge against regulatory uncertainty.
Real Vision analyst Jamie Coutts highlighted Bitcoin’s price correlation with corporate bond spreads and Treasury bond volatility, warning that if these financial conditions worsen, Bitcoin could face further downward pressure.
Yet, not all is bleak—Coutts also pointed to growing nation-state Bitcoin adoption and Michael Saylor’s MicroStrategy potentially acquiring up to 200,000 BTC in 2025, counterbalancing negative forces.
A Game-Changer or Political Play?
Trump’s recently announced Strategic Bitcoin Reserve, initially seen as bullish for institutional adoption, adds to the complexity of the situation.
However, White House official David Sacks clarified that the reserve would be built only from Bitcoin seized in criminal and civil forfeiture cases—not from new government purchases.
“The government will not acquire additional assets for the stockpile beyond those obtained through forfeiture proceedings,” Sacks stated on X.
This revelation disappointed those hoping for an active Bitcoin accumulation strategy by the U.S. government. Worse, the executive order doesn’t explicitly confirm whether past DOJ liquidations, including Silk Road Bitcoin, had already taken place before the policy was enacted.
If the DOJ had already sold a significant portion of these holdings, it could mean the recent price pressure was partially driven by these liquidations—without the market even realizing it.
What Comes Next?
With Bitcoin at a crossroads, traders are watching key economic reports and potential further government crypto liquidations. If these holdings are liquidated, it could add another 5,000 BTC to the market, further influencing Bitcoin’s trajectory.
For now, uncertainty reigns, and whether Bailey’s claims are validated or dismissed as speculation, one thing is clear: the U.S. government’s Bitcoin policy remains a critical factor in the market’s future.
