Bitcoin experienced a flash crash before retreating back as rumors of a possible BTC dump by the US gov started making the rounds.
It all began when a Twitter user known as “beetle” posted a now-deleted tweet informing followers that the US government’s BTC wallets were on the move citing an Arkham Intelligence alert.
As the tweet gathered steam, Arkham Intelligence denied the rumor saying that it has not observed funds moving from wallets connected to the U.S. government.
In a series of tweets on May 10, Arkham claimed that the issue stemmed from community labels to which users could manually add labels to wallet addresses and change data groupings known as Entities.
Such manual changes, according to the platform, “do not reflect associations” made by Arkham itself.
Arkham also stated that only seven Bitcoin wallets had been flagged as being connected to Silk Road, the darknet marketplace where the US had seized several crypto addresses.
That said, investors’ fear was exacerbated when the tweet about the suspected sale instantly went viral and was covered by numerous media outlets.
In less than an hour BTC went down from $28305 to $26995 before rebounding back. At press time, the world’s largest crypto is trading at $27453.
As market analysts weigh on the unconfirmed reports, Whale Wire predicted that the price may still fall below $10k if the US government decides to sell the remaining 200k Bitcoins.
Panic Over Possible Bitcoin Sale Reflects “Market Illiquidity”
The US gov already announced months ago that they will liquidate their coins. A selloff this big based on false rumors is also a testament to the illiquidity of the markets after Jump and Jane Street removed their bids.
According to court documents filed a few weeks ago, the Feds allegedly profited about $215 million when they sold the cryptocurrency in April.
The stolen crypto originated from the Silk Road marketplace, where Hacker James Zhong admitted to taking it before being seized by police back in November.
As per the filing, the Feds still have 41,490 Bitcoins worth $1.1 billion to get rid of.
Multiple reports stated that the government intends to dispose of the leftover Bitcoins in four separate batches this year. Whether these events will halt the bull run and cause its price to fall to new lower lows, is still up for debate.