Los Angeles is burning, and the U.S. government is going to sell Bitcoin?

Source: Talking Outside the Lines

In the past few days, many friends have been sharing various fire videos, as Los Angeles in the United States is burning… I also watched a few videos, and the situation is really severe, with various mansions turning to ashes in the blink of an eye. From above, it looks like a disaster. As shown in the picture below.

Additionally, I saw a video on social media where a reporter asked Los Angeles Mayor Karen Bass some related questions, but she remained silent. Then a Chinese netizen commented in the comments section: "Didn’t you see their hair is burnt? Why are you still asking?"

I have to say our netizens are quite talented, with humorous and sharp language. Of course, in the face of such a merciless fire, we still hope that everyone can be safe and sound, rather than gloating over others' misfortunes.

Let’s not discuss the fire situation here for now. Friends who are concerned about this incident can check X for the latest videos and updates. Next, let’s continue to talk about the market. Since yesterday, the market has further corrected, with Bitcoin dropping to around $91,000 at its lowest. Following past practices, some negative news has naturally emerged, such as the recent discussions about the U.S. government planning to sell Bitcoin.

I remember in a previous article on Talking Outside the Lines, we mentioned a story about Silk Road, where the U.S. government confiscated a large amount of Bitcoin. As shown in the picture below.

As of now, according to Bitcoin Treasuries, the U.S. government still holds 198,109 seized Bitcoins, most of which are said to be related to Silk Road. As shown in the picture below.

Just a few days ago, according to a report from DB News (a news aggregator platform), a U.S. federal judge has ruled that the Department of Justice (DOJ) can sell 69,370 Bitcoins seized from Silk Road. As shown in the picture below.

Although this news seems not to have received further official confirmation, and the judge's ruling alone does not seem to lead to an immediate liquidation of the corresponding Bitcoins, it is said that the DOJ's handling of seized assets involves multiple administrative steps and potential appeal windows. Additionally, based on last year's German government’s selling situation, even if they really want to sell Bitcoin on the market, this process may take several months to complete.

But the market and some people seem to be scared…

In fact, this is not the first time news about the U.S. government selling this portion of Bitcoin has been revealed. In 2022, the Northern District of California court ruled that these assets could be sold, but at that time, Battle Born Investments (a company claiming rights to the seized Bitcoins through bankruptcy assets) raised ownership claims on these assets. Since then, this batch of Bitcoins has remained untouched in the U.S. government wallet, which we can also verify through on-chain data. As shown in the picture below.

Of course, if you do care about this news, the simplest approach is to directly monitor the wallet shown in the picture above. Additionally, I found that some people have proposed a more interesting hypothesis: the U.S. government is revealing this news to encourage retail investors to hand over their chips, allowing large U.S. institutions to continue buying on dips, as they have already sold the Bitcoins seized from Silk Road. As for whether this hypothesis is reasonable, we won't discuss it here, neither supporting nor opposing it.

However, thinking back, this situation is quite interesting. On one hand, the crypto-friendly President Trump is about to officially take office, while on the other hand, the current government is planning to sell Bitcoin. Are some government officials really not giving Trump "face"? I remember last year (2024) at the Bitcoin conference, Trump stated that if he could return to the White House, he would ensure that the government retains 100% of its Bitcoin and would consider listing Bitcoin as a strategic reserve asset for the U.S.

In summary, regarding the news aspect, we actually don’t pay too much attention to such emotional news. Or to put it more bluntly, if the market experiences a significant correction because of this, then looking at it from another angle, it is also the market giving you another opportunity to re-enter.

Or to take a step back, what would happen if the U.S. government really sold Bitcoin "on the market" like the German government did last year?

Theoretically, the market could absorb these 69,370 Bitcoins, as Bitcoin's Realized Cap has increased to $38.17 billion over the past 365 days, while the potential selling pressure from the U.S. government's Silk Road Bitcoins is approximately $6.5 billion at current prices. As shown in the picture below.

Of course, perhaps influenced by emotions, it is not ruled out that the market may continue to experience a larger correction, such as dropping the price directly to the $75,000–$80,000 range. So what? Are you thinking of buying the dip again? To be honest, if it really comes to that, you probably wouldn’t or wouldn’t dare to buy the dip; otherwise, you would have already bought in the $40,000 or $50,000 range. Or to take another step back, even if you think you are lucky enough to wait for Bitcoin to reach $75,000 and you bravely bought the dip, but if Bitcoin continues to drop to around $72,000 (which is near the 0.382 level), how would you respond? Do you have a Plan B? Of course, all of the above is hypothetical, and we cannot accurately predict how the short-term market will move.

Today I noticed that the group is quite lively, with some friends considering selling and others thinking about buying the dip. However, Boss Heng's summary is quite on point: if you are trading short-term, you must prepare your plan in advance. As shown in the picture below.

No one can always successfully buy at the so-called lowest point and sell at the so-called highest point. To achieve high returns, you must first reasonably assess the high risks of the market and evaluate your personal risk tolerance.

Additionally, a special day is coming up: on January 10, 2024 (which is January 11 in Beijing time), the BTC ETF will officially pass, marking a full year since then. So how has Bitcoin, as "digital gold," performed over the past year? Let’s take a look at the comparison chart of Bitcoin and gold's trends:

Continuing with the comparison from the ETF perspective, the first gold ETF (GLD) was officially launched in the U.S. in 2004, and the U.S. Bitcoin spot ETF will officially pass in 2024! After the launch of GLD, it took two years to break through $10 billion, while IBIT (the BTC ETF launched by BlackRock) broke through the $10 billion mark in just seven weeks after its launch. As of January 9, 2025, the latest market value of the ETF (GLD) is $75.13 billion, while IBIT's current market value has reached $52.45 billion.