Two Bitcoin wallets linked by analysts to Silk Road-era activity last moved 3,421 BTC in May this year. Now, follow-up activity on 10 December has added momentum to a year's worth of dormant supply awakenings.
According to the Digital Watch Observatory, May's expenditures amounted to about 3,421 BTC, equivalent to about $322.5 million at the time. The sequence included an outlay of 2,343 BTC at block 895,421, which redirected output to a new SegWit address scheme.
Consolidation vs. Distribution
The on-chain forensic analysis shows 31 consolidated outputs in a new P2WPKH destination, a model more consistent with in-house custody management (custody housekeeping) than with an immediate deposit on an exchange.
Trackers reported on 10 December a further consolidation of just over $3 million from over 300 wallets labelled as connected to Silk Road.
The distinction between consolidation (such as May's routes) and transfer to labelled exchanges (such as Coinbase Prime) shapes the response of traders. Flows to Coinbase Prime, or other prime broker venues, are in fact treated as potential short-term supply and, historically, US government transfers in August 2024 (10,000 BTC) and December 2024 (approximately 19,800 BTC) to Coinbase Prime have coincided with temporary risk-off positioning.
The Context of Government Sales
May's wallets were initially created in July 2013 and had been dormant for some 11-12 years prior to the spending, anchoring the dormant supply narrative.
However, the quantities involved in 2024 were an order of magnitude larger than the spending of the May 2025 dormant wallets, which explains why market participants prioritise labelled receipts on exchanges over unlabelled consolidations.
The precedent set by the 2014 auction by the United States Marshals Service of 29,656 BTC seized from Silk Road, won by Tim Draper, demonstrated that official liquidation could be absorbed. Subsequent seizures, such as the 69,370 BTC tied to "Individual X" (2020) and the 50,676 BTC from James Zhong (2022), continued to give partial visibility to the market.
Market Perspectives
Traders' interpretation now focuses on labels and routing. Consolidation to new P2WPKH addresses, as in the case of May 2025, suggests internal re-keying and a low probability of immediate sale (40-55% probability scenario).
A stealthy OTC (Over-The-Counter) distribution path (25-35%) would see coins routed to a prime broker for block trades. A securities-driven de-risk scenario (10-20%) would require new, larger government transfers (10,000-20,000 BTC) to coincide with a weak ETF flow.
Supervision focuses on tagged receipts, particularly Coinbase Prime, in the days following any new Silk Road-related spending. However, given that billions of dollars' worth of liquidity is regularly absorbed by the US Bitcoin spot ETFs each week, Silk Road sales are unlikely to materially affect the price without another psychological catalyst. The May 2025 pattern and December 10 activity indicate consolidation, not distribution, until exchange labels appear.
