• Bitcoin price slipped to $27,300 and jumped above $30,000 before returning to trade at $28,300.
  • The volatility was triggered by an Arkham alert that stated the US government and Mt. Gox wallets were conducting transactions.
  • The United States government is currently one of the biggest BTC whales holding a supply worth nearly $6 billion.

Bitcoin price drives the crypto market, and at the moment, the cryptocurrency is observing the most volatility. The fragility of the crypto market has grown to the extent of being triggered by a simple alert tweet, resulting in a rally and a crash on the very same day.

Bitcoin price is vulnerable to everything

Bitcoin price went haywire for a few hours as April 26 came to an end, all thanks to an alert from Arkham Intelligence. The alert mentioned that the wallets under the name of Mt. Gox and the government of the United States were conducting transactions.

This triggered a wave of bearishness in the market that resulted in the Bitcoin Open Interest (OI) plunging by 20% in a single hour. Although the OI had since recovered by 10% at the time of writing, the total Bitcoin open interest across all exchanges stood at $7.4 billion, down from $8.1 billion.

Bitcoin Open Interest

Bitcoin Open Interest

Soon after the entire crypto Twitter began panicking, Arkham issued a clarification in regard to the alert stating it was a bug fix that sent the erroneous alert. The issue was promptly resolved thereafter. Arkham stated,

“Today we fixed a bug related to Bitcoin alerts that caused us to no longer under-send alerts to a small subset of user’s private labels. This was one of them. This fix won’t affect any additional users, and was unrelated to labels generated by Arkham — we understand the impact alerts can make, and we recommend users double check and verify on-chain prior to making moves on the information.

However, in that duration, Bitcoin price whipsawed before coming back to trade at $28,487 at the time of writing. In the span of two hours, BTC visited the monthly lows of  $27,000 and proceeded to breach the psychological resistance level at $30,000. 

BTC/USD 1-day chart

BTC/USD 1-day chart

The fear of a dump at the hands of the US government that caused panic in the market brought to light an important factor. Presently, the US government is one of the biggest whales in the crypto market as it has a holding of more than 205,515 BTC worth nearly $6 billion. 

This $6 billion supply is the result of multiple seizures that took place over the years. A little over 215,000 BTC has been accumulated from wallets seized by the government in connection to the Silk Road hack, Bitfinex hack and Silk Road thief James Zhong.

US government’s Bitcoin holdings

US government’s Bitcoin holdings

Eventually, all of this Bitcoin is set to make its way into the market since it will be auctioned away. A glimpse of this was noted towards the end of March when the US government sold off about 9,816 BTC worth $215 million during an auction. Consequently, this makes the government the biggest trigger point for the market.

As it is, given the regulatory uncertainty and consistent crackdown that has occurred over the last few months, the government and its agencies are one of the biggest threats to the crypto market. Adding to that, the control of close to 1.2% of the entire BTC supply makes them all the more powerful.

However, the government’s holding is not inherently a threat to the market since a sudden dump is out of the question, as the investors will be prepared for any auction that takes place eventually. But it does make the United States government one of the biggest Bitcoin whales.


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