Fears that the U.S. government was selling Bitcoin invoked a market-wide selloff on Wednesday.
On-chain data appeared to show 9,800 BTC, worth around $277 million, moving out of a wallet associated with the government’s Silk Road crypto seizure. As it turns out, there was no change in the U.S. government’s Bitcoin balance, evidenced by blockchain data monitored by Glassnode.
Glassnode not showing any decline in the US Government's Bitcoin balance
— Will Clemente (@WClementeIII) May 10, 2023
Still, the rumours were enough to trigger panic amongst crypto market participants and Bitcoin’s price dropped to an intra-day low of $26,883. At the time of writing, the market-leading digital asset had recovered to $27,461, still down 1% over 24-hours.
The confusion around the inaccurately labelled wallets stems from users of blockchain analytics platform Arkham Intelligence. The platform allows users to manually label wallet addresses, even if Arkham itself has not officially tagged it as a verified entity.
Custom-labeling Entities on Arkham allows users to receive Alerts and transaction logs for addresses that Arkham may not have officially tagged as part of the entity.
These are the only Bitcoin wallets in our Silk Road Entity, we have not changed these today. pic.twitter.com/1eQNNONrsr
— Arkham (@ArkhamIntel) May 10, 2023
“There have been no outgoing Bitcoin transactions from these wallets today,” said Arkham, linking the officially labelled Silk Road entity.
A similar situation took place in late April, when erroneously labelled wallet addresses tied to Mt. Gox and the U.S. government alerted Twitter news source “db” to what appeared to be sizeable on-chain transfers from these entities. Market participants attributed the false alarm as the reason why Bitcoin dropped 8% in a single day.
henceforth this pattern is now known as the "Arkham Candle" pic.twitter.com/eXKnSr0mFN
— Alex (@thiccythot_) May 10, 2023