Bitcoin holders feeling dejected by the currency's latest slump have found a new target to blame: national governments dumping large quantities on the market. They might have a point. In the last week alone, the U.S. government moved to sell 3,940 Bitcoins (worth around $240 million) seized from a narcotics trafficker in 2014, while the German government dumped 900 Bitcoins—prompting fears Berlin could sell off its entire stash of over 45,000.
Those government hoards are together worth billions of dollars. Even though Bitcoin is highly liquid and widely distributed, it is still subject to the law of supply and demand, and large-scale sell-offs will invariably drive prices down. This is hardly the first time, though, that government sell-offs have put a strain on Bitcoin prices. In the case of Uncle Sam, the U.S. Marshalls Service has been auctioning Bitcoin stashes seized by the FBI, IRS, DEA, and other agencies for over a decade now.
