hmmm never thought of this. But government will sell to whom??? They will become even more expensive because government can only hold them and the demand for btc is increasing it will only increase the price of btc not reduce it
They wouldn't sell them their purpose is to destroy Bitcoin because it's a threat it doesn't have to be the government either it could be a bank they want fiat money and not Bitcoin bitcoin is a threat and I think the majority of the attacks came from banks in the early days of Bitcoin.
AND if it did drive up the price first of all like you said it would come crashing down if this was done in a small amount of space people might be afraid of investing in Bitcoin....
thus effectively killing it.
I'm just raising a concern I've had and would love to see Bitcoin succeed but I should imagine the banks and te government have enough money or resources to require a lot of the Bitcoin money either from seizing or buying a large amount of Bitcoin.
The government have intelligence behind them and some of the best hackers in the world and I think they would be able to gain access to the majority of the exchangers and could compromise the Bitcoin stored in them or they could simply take legal action against them