The BTC that was sold is linked to Silk Road seizures. The selloff also caused market volatility and temporarily pushed Bitcoin’s price below $93,000. Additionally, on-chain data showed large BTC movements to exchanges at a loss, and over millions in leveraged long positions were liquidated. Some analysts now predict a potential drop to below $90,000 before a rally to $126,000. Meanwhile, Oklahoma Senator Dusty Deevers introduced the Bitcoin Freedom Act to enable Bitcoin payments.
$6+ Billion in Bitcoin Sold by US Government
The United States government executed a huge liquidation of 69,370 Bitcoin (BTC) that was seized from the Silk Road darknet marketplace. The move is valued at $6.7 billion. This decision was authorized by the US Department of Justice (DoJ), and was part of a resolution to the prolonged ownership dispute with Battle Born Investments. The DoJ pointed to Bitcoin’s notorious price volatility as a justification for approving the sale.
Arkham Intelligence reported that the US government wallet, which held the Bitcoin, saw its balance drop to zero on Jan. 8. The timing of the selloff raised quite a few eyebrows as it happened just 10 days before Donald Trump’s return to the White House.
The move also contradicts the Trump administration’s consideration of establishing a strategic Bitcoin reserve. Battle Born Investments lost its claim to the assets through a bankruptcy estate, and criticized the decision as an abuse of the Civil Asset Forfeiture process. Its legal team also condemned the DoJ for alleged procedural maneuvering.
Bitcoin’s price responded by dipping under $93,000 and raising investor concerns about a further correction below $90,000. At press time, The price of BTC recovered slightly to trade at $94,075. On-chain data also points to rising panic among short-term holders, and about 23,200 BTC was recently moved to exchanges at a loss. Funding rates in the derivative market have also declined, which signals waning confidence in Bitcoin’s immediate upward trajectory.
Despite the selloff and price dip, some well known people in the cryptocurrency community are still optimistic. Robert Kiyosaki sees the decline as an opportunity to accumulate Bitcoin at lower prices. Meanwhile, Arthur Hayes, the former CEO of BitMEX, predicts a liquidity infusion of $612 billion in the first quarter of 2025, which he believes will propel Bitcoin to new heights. Adding to the bullish sentiment, El Salvador’s President Nayib Bukele hinted at increasing the country’s Bitcoin holdings.
Historically, Bitcoin’s January performance after halving years has been riddled by heightened volatility, and 2025 appears to be no exception.
Fed Policy Concerns Also Behind Bitcoin Correction
Bitcoin’s recent price correction has also been attributed to growing concerns over the US Federal Reserve’s tightening monetary policy, which is a factor analysts believe could play a major role in shaping Bitcoin’s price action throughout 2025. This downturn in BTC’s price has been linked to strong US economic data suggesting potential interest rate hikes, which make cryptocurrencies less appealing as investments. Ryan Lee, chief analyst at Bitget Research, believes that signals of tighter monetary policy from the Federal Reserve exacerbated the market corrections.
BTC’s price action over the past 24 hours (Source: CoinMarketCap)
Expectations of a rate cut have been delayed, and the CME Group’s FedWatch tool indicates that the first lending rate cut may now occur on June 18. In the meantime, the Federal Reserve is expected to keep rates unchanged at its upcoming meeting on Jan. 29.
The market’s reaction to these developments has been very evident, with over $631 million in leveraged long positions liquidated in the past 24 hours, according to CoinGlass data. Analysts suggest that this large-scale liquidation could lead to a consolidation phase as traders adjust their leveraged positions.
Bitcoin’s price could potentially dip below $90,000 before embarking on a rally above $126,000, according to some market analysts. John Glover, chief investment officer at Ledn, believes that Bitcoin may require another correction to end the period of holiday illiquidity, possibly testing the $90,000 level again before moving higher. He sees this phase as part of the fourth wave in wave analysis, and predicted a rally to the $126,000–$128,000 range after this consolidation.
To avoid further downside, Bitcoin needs to hold above the $91,000 support level, according to crypto analyst Rekt Capital. The analyst also pointed out that Bitcoin’s failure to maintain support at $101,165 pushed it back into a lower trading range.
Oklahoma Senator Pushes Bitcoin Payment Legislation
Some US states are also still optimistic about Bitcoin’s potential. Oklahoma State Senator Dusty Deevers introduced the Bitcoin Freedom Act, which is legislation that would allow employees, residents, and businesses in the state to opt for Bitcoin as a means of payment for salaries and transactions.
The bill was filed as SB325, and is designed to provide a framework for the secure use of Bitcoin while maintaining voluntary participation to uphold free-market principles. Deevers strongly believes in Bitcoin’s potential to combat inflation and preserve the purchasing power of Oklahomans due to its decentralized and censorship-resistant nature.
One of the main goals of the legislation is to position Oklahoma as a national leader in adopting financial technology innovations. It also aligns with President-elect Donald Trump’s pro-Bitcoin stance, which Deevers praised for bringing the cryptocurrency into the economic mainstream. The bill also highlights Bitcoin’s role as an alternative to inflationary fiat currencies, and Deevers criticized the Federal Reserve’s policies for eroding the value of the US dollar. He stated that the act will empower citizens with more financial options while encouraging a forward-looking approach to financial technology in the state.
The proposed legislation is part of Deevers’ broader campaign to address the financial challenges that are faced by his constituents. He is especially concerned about central bank digital currencies (CBDCs), and warned that they could lead to government overreach and undermine financial privacy. On the other hand, Deevers believes that Bitcoin promotes financial sovereignty by allowing people to control their money free from government interference or inflationary manipulation.
Inflation in the United States has been rising since September 2024, and reached 2.7% after peaking at over 9% during the pandemic. This economic backdrop backed up arguments for Bitcoin as a hedge against inflation.
US inflation on the rise (Source: Trading Economics)
Oklahoma has already taken steps to embrace cryptocurrency and blockchain technology after Governor Kevin Stitt enacted legislation in May of 2024 that created a legal framework for blockchain firms and safeguarded crypto mining activities. This law took effect in November, and facilitated Bitcoin mining operations in the state.
The Bitcoin Freedom Act will be considered during the 60th legislative session beginning on Feb. 3.
