Bitcoin Drops Below $59,000 Following Silk Road’s $591 Million US Govt BTC Transfer

• The US government moved 10,000 Bitcoin seized from Silk Road to Coinbase Prime.
• BTC fell over 3% following the move, while US CPI data suggested the possibility of the Fed cutting rates.
• Bitcoin price movement has often changed with changes in BTCE reserves, a pattern that has changed recently.

Bitcoin briefly fell below $59,000 on Wednesday following news that the US government had moved 10,000 BTC to Coinbase Prime. On-chain data also shows a trend change in the correlation of Bitcoin price with BTCE fund reserves.

Bitcoin Drops As US Government Moves 10,000 BTC

According to data from Arkham Intelligence, the US government transferred 10,000 Bitcoins – the equivalent of $591 million – to Coinbase Prime on Wednesday.

The wallet, which goes by the name “US Government: Silk Road DOJ”, made the initial transfer two weeks ago and transferred the funds again to Coinbase Prime today.

The funds are suspected to be from Silk Road BTC seized after an earlier $2 billion Bitcoin transfer in July. Following the report, Bitcoin fell slightly below $59,000.

The drop also coincides with the July release of US Consumer Price Index (CPI) inflation data. CPI came in at 2.9% on the year – below expectations and the lowest rate since 2021. Declining inflation increases the chances of the Federal Reserve cutting interest rates in September.

As a result, several investors are anticipating a rise in digital asset prices in the coming weeks, as risk assets such as cryptocurrencies often see price increases in a lower interest rate environment.

Meanwhile, on-chain analytics provider CryptoQuant has released an analysis that reveals a correlation between Bitcoin price movement and the behavior of Germany’s ETC Group Physical Bitcoin (BTCE) fund. The price of Bitcoin often increases when the reserve increases and decreases when the reserve decreases.

BTCE Fund Holdings

This historical pattern appears to have been altered since January after the launch of US spot Bitcoin ETFs, as the decline in the BTCE reserve had little impact on the price of Bitcoin. This indicates changes in market dynamics or other influences that warrant a deeper analysis.