Crypto industry executives and observers were quick to point out the folly of the United States government’s decision to transfer $1.9 billion of Bitcoin to Coinbase.
“This is a huge strategic mistake. There is no price where it makes sense for the US to sell any Bitcoin it has under its control,” Jason Lowery, a United States Space Force major and author of Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin, said on Dec. 3.
“They have no idea what they own, and it shows,” he added:
“Remember this post when they inevitably try to justify a new version of EO 6102 to reclaim the Bitcoin they sold off due to their ignorance about the true significance of this technology.”
EO 6102 is an executive order signed in 1933 by President Franklin D. Roosevelt “forbidding the hoarding of gold coin, gold bullion, and gold certificates” in the United States.
On Dec. 2, the US government transferred about 19,800 Bitcoin (BTC) worth $1.9 billion at the time to a Coinbase Prime deposit address.
Coinbase CEO Brian Armstrong added his opinion to Lowery’s post, agreeing that the US government shouldn’t sell its Bitcoin.
Brian Armstrong agreed that selling BTC was a bad idea. Source: Brian Armstrong
“If they are dumb enough to sell (which we all know governments are dumb), then that supply will get eaten up instantly,” said crypto educator Toby Cunningham, while another observer added, “Biden will do as much damage as he can before he leaves office.”
So far, the US government has transferred a total of 25,999 BTC worth around $2.49 billion to Coinbase this year. However, these transfers may be custody actions rather than sales, according to analytics platform Spot On Chain.
Tether strategy adviser Gabor Gurbacs suggested the US government may be consolidating wallets or upgrading old addresses.
“There is also a lot we don’t know. It’s not guaranteed they will sell. I haven’t seen any official auction information yet,” he said.
Related: Mt. Gox and US gov’t could introduce $15B Bitcoin selling pressure
Head of research at CryptoQuant, Julio Moreno, said it was “highly likely” that only 10,000 BTC were sold in the most recent movements, as these were sent to Coinbase Prime, while the remaining 9,800 BTC went to a newly created address.
According to Spot on Chain, the US government holds about 183,850 BTC worth around $17.7 billion across various known addresses.
Crypto balances on US government’s known addresses. Source: Spot On Chain
Bitcoin prices dipped sharply at the time of the transfer, falling almost 3% to $94,500. The asset had recovered to about $96,000 at the time of writing.
Magazine: Legal issues surround the FBI’s creation of fake crypto tokens