Boom Goes The Bitcoin

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Dropped, as Yoda would say, the other shoe has. U.S. Marshals are now selling off 29,656.51306529 BTC, about $18 million in bitcoin at today’s $600 price. The sale announcement drove prices down for a brief period overnight moving the needle down from $620 to $608.

Another cache of $83 million worth of bitcoin is also being allegedly auctioned off by the FBI. Anyone who didn’t see this coming was delusional.

Note that the U.S. Marshals are also treating this like a seized assets sale and not a currency sale. This also does not include Ross Ulbricht’s BTC which are stored in another wallet in his name. The government is treating this no differently than a drug lord’s jet ski or Cadillac. And don’t expect to waltz in and pick these up at a song – every potential bidder has to pony up $200,000 just to be in the running. Furthermore, don’t expect to ship these to North Korea or into your “Bad Motherfucker” wallet:

Block Transactions. The USMS will only sell the bitcoins in the Series A and B Blocks as described above. No bitcoin transfer will be made until the USMS has confirmed receipt of all purchase funds from the buyer. The USMS will not transfer bitcoins to an obscene public address, a public address apparently in a country restricted by the Office of Foreign Assets Control (OFAC), a public address apparently associated with terrorism, other criminal activities, or otherwise hostile to the United States.

Where, then, does bitcoin go from here? There are nearly 13 million BTC in circulation right now, making 29,000 a paltry sum. In the skittish, information-reactive world of bitcoin, however, this is nearly the end of the world. As bitcoin bugs begin their mad dash to buy and sell on trends, the volatility should bring bitcoin down further before it goes back up anywhere near its recent highs.

What’s most interesting, however, is that the U.S. Marshals are now directly involved in bitcoin transactions. When governments begin using new tools, these tools become precedent, and these precedents become commonplace. Coupled with the launch of CoinVox for cryptocurrency political donations, it’s clear world governments see BTC as a usable (if not dangerous) alternative to fiat currency.

Bitcoin will weather this storm. That this storm exists at all, however, is a testament to the currency’s staying power, if only as a wealth-transfer mechanism. It could also legitimize bitcoins in the legal system, showing that they can be seized and sold just like a drug dealer’s gold-plated .45 or palatial mansion. It’s also important to note that the government is stumped as to what to think of bitcoin right now. To wit: “The USMS does not make any representations or warranties regarding Bitcoin,” write the U.S. Marshals. Sadly, neither can anyone else.