Why everyone is keeping an eye on Mt. Gox, US Gov Bitcoin Wallets

Bitcoiners look at crypto held by the Fed.

On Wednesday, the price of Bitcoin took a sharp dive – 7% plunged in an hour. It took most of the crypto market with it as well.

The fall came shortly before blockchain analytics firm Arkham said wallets linked to defunct crypto exchange Mt. Gox and the US government had moved large amounts of Bitcoin.

It turned out to be a false alarm as a result of a “bug fix,” Arkham said later in a statement. But that led some to believe that the drop in prices came because the government started dumping large amounts of Bitcoin on the market.

But the fact remains that the state-owned Bitcoin and Mt. Gox coins are exciting for investors: On Thursday, another blockchain analytics firm, Glassnode, said the US government and Mt. Gox trustee holds 205,514 and 137,890 Bitcoins (over $10 billion in crypto) respectively – and advised investors to keep an eye on the funds.

This is because when such large amounts of Bitcoin are transferred, the market moves, according to experts.

But first, why does the US government hold Bitcoin? And what is Mt. Gox?

Last year, the Department of Justice seized more than $3 billion in Bitcoin associated with the dark web marketplace Silk Road. They then sold a large portion of it – and said they plan to sell more.

Mt. Gox, on the other hand, was a popular Bitcoin exchange that was forced to close eight years ago after a crippling hack. Once one of the largest exchanges in the world, it shut down in 2014 after losing 850,000 Bitcoins (today worth $24.9 billion) in the massive exploitation.

Investors who lost their money are still waiting to get it back from a trustee.

Christoph Ono, a contributor at open-source Bitcoin resource Bitcoin Design, said Decrypt that the intrigue is centered around risk.

He said: “Will the US government hold onto these Bitcoins forever? Or sell them? If so, will they do it in a way that reduces the impact on the market or just dump them all at once? Or auction them off? Who knows.”

The fascination of seeing the wallets where Mt. Gox funds are held equal, he added. “I think Mt. Gox is somewhat similar in that there are different unknowns,” Ono said. “At some point the coins will be released into the wild, but no one really knows when or how.”

While Glassnode’s principal analyst James Check said that large investors may be interested in sovereign coins.

“Periodically, the US government auctions off these coins, which institutions in particular often find quite attractive, since they are in theory blessed and trusted by the US government,” he said. In the past, some institutions have worried about the origin of cryptoassets when buying them, worrying that they may unknowingly be buying from bad actors.

No matter what happens, investors always keep an eye on big HODLers – known as whales – especially unorthodox ones like the US government.

“Roughly $10 billion worth of bitcoin is a huge amount for the market to absorb,” said Evan Kaloudis, the developer behind Zeus, a non-custodial Lightning wallet. Decrypt. “However, I am excited for the authorities to unload them on the market to circulate to new holders.”