Is the U.S. Government Secretly Selling Bitcoin? DOJ’s Silk Road Holdings Spark Market Concerns

Bitcoin Magazine CEO Suggests DOJ Liquidation Contributed to Price Drop

Speculation is swirling around whether the U.S. Department of Justice (DOJ) has been quietly offloading Bitcoin seized from the notorious Silk Road marketplace, potentially fueling the recent market downturn.

David Bailey, CEO of Bitcoin Magazine, ignited the debate with a March 10 post on X, suggesting that despite former President Donald Trump’s pro-Bitcoin stance, the DOJ may have been liquidating its Bitcoin holdings since receiving court approval in December 2024.

“If the DOJ has been liquidating America’s Bitcoin with haste (in defiance of the President) ever since getting court approval to do so 3 months ago… then Bitcoin’s price action makes perfect sense.” — David Bailey (@DavidFBailey)

While some dismissed the theory, arguing that the DOJ’s Bitcoin stash wasn’t significant enough to impact the market, others pointed to broader macroeconomic pressures contributing to Bitcoin’s price fluctuations. However, concerns over government-controlled Bitcoin reserves and the potential implications for federal economic policy remain at the forefront of discussions.

Silk Road Bitcoin Sales: A Market Catalyst?

Bailey’s claims stem from a U.S. court ruling in December 2024, which granted the DOJ the authority to liquidate 69,370 BTC confiscated from Silk Road. Historically, the agency has auctioned off seized cryptocurrency in bulk sales, but the lack of transparency surrounding the timeline for these liquidations has fueled speculation.

Bailey’s post suggested that the DOJ may have been actively selling Bitcoin over the past three months, contributing to the asset’s price decline. In response to a user’s query about how the community could prevent further sales, Bailey cryptically stated, “Working on it.”

Another user speculated that White House Crypto Czar David Sacks could confirm the alleged sales, to which Bailey replied, “30 days.”

While no official confirmation has been provided, the speculation intensified as Bitcoin’s price tumbled 7% on March 10, hitting $80,052, according to TradingView data.

Macroeconomic Factors or Government Sell-Off?

Some analysts argue that while DOJ sales may have a short-term impact, larger economic forces play a more significant role in Bitcoin’s price movements.

Real Vision analyst Jamie Coutts highlighted the correlation between Bitcoin’s price trends and macroeconomic indicators such as corporate bond spreads and Treasury bond volatility.

“Bitcoin is like playing a game of Chicken with central banks. While my framework is turning bullish as the dollar plunges, two metrics still raise alarms: Treasury Bond volatility (MOVE Index) and Corporate Bond spreads.” — Jamie Coutts (@Jamie1Coutts)

Coutts warned that widening bond spreads could further pressure risk assets like Bitcoin. However, he remained optimistic about Bitcoin’s long-term trajectory, citing growing nation-state adoption, expected institutional inflows through ETFs, and MicroStrategy’s potential acquisition of up to 200,000 BTC in 2025.

Trump’s Strategic Bitcoin Reserve: A Limited Vision?

The DOJ’s alleged Bitcoin sales come amid broader uncertainty regarding the U.S. government’s cryptocurrency strategy.

Trump’s recent executive order establishing a Strategic Bitcoin Reserve was initially seen as a bullish move for institutional adoption. However, White House Crypto Czar David Sacks clarified that the reserve would be composed solely of Bitcoin obtained through criminal and civil forfeiture cases, dashing hopes that the government would actively accumulate new BTC holdings.

“The government will not acquire additional assets for the stockpile beyond those obtained through forfeiture proceedings.” — David Sacks (@davidsacks47)

Although the order prevents future sales from the reserve, it does not specify whether past liquidations—including those from Silk Road—had already occurred before the policy took effect. This ambiguity has fueled further speculation that the DOJ may have offloaded a significant portion of its Bitcoin holdings prior to the reserve’s creation.

Some experts have suggested that Trump could bolster the reserve by liquidating other government-seized crypto assets. As of March 10, blockchain intelligence firm Arkham reported that the U.S. government held approximately:

• 60,850 Ethereum ($125 million)
• 122 million Tether
• Various other assets, including Binance Coin (BNB) and Wrapped Bitcoin

If liquidated, these holdings could potentially yield an additional 5,000 BTC.

What’s Next for Bitcoin?

Traders and analysts are closely monitoring upcoming economic data releases, including the Consumer Price Index (CPI) on March 12 and the Producer Price Index (PPI) on March 13. These reports will provide insights into inflation trends and could influence the Federal Reserve’s monetary policy decisions—key factors that could shape Bitcoin’s near-term price action.

While the DOJ’s potential Bitcoin sales remain unconfirmed, the ongoing uncertainty surrounding government crypto policies, inflation, and bond market movements continues to add volatility to the digital asset landscape.