Bitcoin’s sudden drop in price yesterday from $10,00 to $9,507, could be related to the United States Marshals Service announcing it had auctioned off $37 million in forfeited Bitcoin, an analyst at the social investment network eToro said today.
“Put simply, bitcoin's price drop yesterday was due to a dump in the market,” eToro’s Simon Peters told Decrypt. “This followed a United States Marshals Service announcement earlier this week stating they had sold off roughly 4,000 BTC (around $37 million) that had been seized from criminal cases.” On February 18, the US Marshals sold 4,041 Bitcoins that had been forfeited in criminal cases, or seized by authorities.
Drugs kill
Some of the money was related to the sale and distribution of drugs. For instance, over $200,000 worth of crypto sold by the US Marshals was forfeited by drug dealers from Alabama. Tyler Lee Ward and Henry Long Nguyen were imprisoned in May 2019 for conspiring to sell Alprazolam, maintaining a “drug-involved premise,” and “conspiracy to commit money laundering,” according to a press statement by the Department of Justice.
“Analysts feared the auction winner could potentially make a cash gain by selling the bitcoin on a public exchange, especially if they've acquired the coins for below market price,” said Peters.
Whale Alert, a Twitter accounts that tracks movements on various blockchains and flags large transactions, reported on Tuesday that 6,000 Bitcoins were transferred from an unknown wallet to Bitfinex. Whether this was the auction winnings or not is not clear—the sale was for a little over 4,000 Bitcoin, and split between several different bids—but it sure smelled like it.
Whether yesterday's dump is direct manipulation or just coincidence, “the jury is still out,” said Peters. But “what is evident is that overall liquidity of the crypto market must improve in order to prevent large market orders leading to such volatile price swings in the future,” he added.