US government selling Bitcoin called a strategic mistake by experts

The recent decision by the US government to transfer $1.9 billion worth of Bitcoin (CRYPTO:BTC) to Coinbase has sparked strong reactions from the crypto community, with some industry figures labeling it a "huge strategic mistake."

“There is no price where it makes sense for the US to sell any Bitcoin it has under its control,” Jason Lowery, a United States Space Force engineer, expressed his concerns on X on December 3. 

He further added, “They have no idea what they own, and it shows,” pointing to the lack of understanding regarding Bitcoin’s long-term significance. 

Lowery referenced Executive Order 6102, signed in 1933, which prohibited hoarding gold, suggesting that the government could later attempt to reclaim sold Bitcoin due to "ignorance about the true significance of this technology."

On December 2, the US government transferred approximately 19,800 BTC, valued at $1.9 billion at the time, to a Coinbase Prime deposit address. 

“The US government should never sell Bitcoin IMO,” Coinbase CEO Brian Armstrong agreed, while many criticised the move.

“If they are dumb enough to sell, then that supply will get eaten up instantly,” crypto educator Toby Cunningham warned, stating that such sales would quickly be absorbed by the market.

Others speculated about the timing of the sales, with some humorously pointing out that President Biden may cause damage before leaving office.

So far this year, the US government has transferred 25,999 BTC, worth about $2.49 billion, to Coinbase, although these transfers appear to be custodial actions rather than sales, according to the analytics platform Spot On Chain. 

Tether (CRYPTO:USDT) strategy adviser Gabor Gurbacs suggested that the government might be consolidating its wallets or upgrading old addresses.

Spot On Chain revealed that the US government still holds around 183,850 BTC, valued at approximately $17.7 billion. 

Bitcoin prices briefly dipped after the transfer, but the asset has since recovered.

At the time of reporting, the Bitcoin price was $96,037.75.