The US government seized Bitcoin on Monday as the cryptocurrency market plummeted due to military attacks on Iran.
On-chain analytics platform Arkham Intelligence tracked three transfers totaling approximately 1.23 Bitcoin (approximately $22,550) from a wallet labeled “Miguel Villanueva Seized Funds” to three separate wallets that received $2,500, $16,250, and $3,800, respectively.
Small transfer, big timing
The amount was modest. However, such small-scale government crypto transfers are often preceded by larger moves, and the timing immediately caught the attention of traders who were already closely watching the market.
Source: Arkham Intelligence
The U.S. government currently holds approximately $23 billion in seized cryptocurrencies, according to Arkham data. No official explanation has been given regarding this transfer.
By the time the transfer was recorded, Bitcoin was already suffering. As the US and Israeli militaries launched attacks on Iran over the weekend, the price fell by about 3% within hours, to nearly $63,000, before quickly rebounding and rising to $71,000 at the time of writing.
The BTC transfers. Source: Arkham Intelligence
Gold and oil rose. US stock futures fell. Bitcoin did what it usually does when fear reigns and was sold off along with other risky assets.
Markets lash out at Khamenei news
Then things changed again. After Iranian authorities confirmed the death of Supreme Leader Ayatollah Khamenei, Bitcoin briefly soared to $68,196, before reversing and settling at around $65,300, still down about 2%.
Iran responded to the attack by firing missiles at Israel and attacking U.S. military bases in Kuwait, the United Arab Emirates, and Bahrain.
Through it all, Bitcoin has held up better than U.S. stock futures. Funding rates in the Bitcoin futures market turned sharply negative during the worst of the selloff, a sign that traders were rushing into short positions in hopes of further losses. Analysts say a further wave of risk-offs could follow if the conflict escalates and oil prices soar.
Iranians rush to transfer funds
On the ground in Iran, the public reacted immediately. Nobitex, the country’s largest cryptocurrency exchange, experienced a 700% spike in outflows immediately after the strike began. Cryptocurrencies provided one of the few channels available to quickly move funds across borders under sanctions.
A convergence of events, including a real-life military conflict, government Bitcoin transfers, and a dramatic spike in Iranian crypto activity, landed on the market all at once.
It remains unclear whether the move to the United States was routine or something more extensive. Traders are watching the next wallet move as carefully as the next headline in the region.
Featured image from Unsplash, chart from TradingView
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