Approximately 49,000 BTC from U.S. government-associated wallets has been moved on-chain.

Data shared by blockchain analytics platform Glassnode on Tuesday shows that Bitcoin seized by the government is on the move, most of which appear to be internal transfers. However, analysts found that 9,861 BTC seized from the Silk Road hacker was sent to crypto exchange Coinbase. 

According to PeckShield, the entire sum worth $1 billion, including the funds tied to the Silk Road hack, was transferred to the crypto exchange.

Whenever coins are sent to exchanges, the most common assumption is that they have been deposited on the platform with the intention to sell.

A number of market participants took this to mean that the U.S. government was looking to sell a large chunk of these Silk Road-associated funds. 

A market sell order of this magnitude has the capacity to drive Bitcoin’s price significantly lower. At the time of writing, the leading digital asset was trading at $22,134, down 1.5% in the last 24 hours.

Over the last few months, Bitcoin’s price has taken a toll following a sequence of negative effects, including several high profile crypto firms going bankrupt. The collapse of FTX in November drove Bitcoin’s liquidity down significantly, but despite somewhat recovering over the last few months, the asset’s market depth is now in worse shape than it was back then.  

Coupled with short-term volatility being on the lower end of the spectrum, the market outlook for a price move up for Bitcoin looks bleak, according to some technical analysts.

“The Bitcoin economy often reacts not only to levels widely observed in traditional technical analysis but also the psychological cost basis levels of various investor cohorts printed on-chain,” said Glassnode in the latest edition of its newsletter. 

Whether or not the government intends to sell Bitcoin, there’s a good chance that prices will drop lower on traders’ anticipation of the event.