The German government has unleashed a significant volume of Bitcoin onto the market, transferring at least $615 million worth to various crypto exchanges and entities as of Wednesday, according to Arkham Intelligence.
In mid-January, authorities in Saxony seized nearly 50,000 Bitcoin, valued at approximately $2.1 billion at the time, from suspects linked to Movie2k.to, a film piracy website active in 2013. The suspects voluntarily transferred the assets to the police.
On-chain data indicates that Bitcoin has been moving in and out of the German Government (BKA) wallet since late January. Currently, 13,111 Bitcoin, worth around $759 million, remain in the wallet, meaning roughly 75% of the seized assets have been sold off.
The influx of $2.1 billion worth of Bitcoin into the market has likely unsettled investors. This selling activity has coincided with recent price corrections. Data from CoinGecko shows that Bitcoin’s decline started on June 6, aligning with the accelerated outflows from the BKA. Bitcoin has since dropped about 19%, now trading around $57,000.
OKX Chief Commercial Officer Lennix Lai acknowledges the market’s concern over Germany’s Bitcoin liquidation. Adding to the selling pressure is Mt. Gox, which recently began repaying creditors with $9 billion worth of Bitcoin, alongside the U.S. government’s sale of seized Silk Road and Banmeet Singh coins.
Zach Bruch, founder and CEO of crypto casino MyPrize, told Fortune, “All of this is not only applying legitimate sell pressure into the market but also telegraphed selling to the market—giving market participants the opportunity to sell in anticipation of these events occurring.” This anticipation has intensified the sales’ impact.
The Bigger Picture
Despite these events, the 50,000 Bitcoin sold represents only 0.25% of the total supply of approximately 19.7 million mined so far. “While such sell-offs may result in short-term volatility, the Bitcoin market tends to have adequate liquidity to absorb them and rebound fairly quickly. It’s unlikely that these sell-offs will trigger a landslide drop in Bitcoin price,” Lai reassured.
Interestingly, despite Bitcoin’s recent downturn, spot ETFs have seen fresh capital inflows after weeks of outflows. Since June 25, these funds have netted $886.8 million, according to CoinGlass data, potentially slowing the price decline.
Critics from the crypto community have questioned the German government’s mass sell-off policy, especially given central banks’ typical approach of holding large reserves of foreign currencies. The U.S., for example, holds at least $35 billion worth of euros and yen. Some argue that selling Bitcoin for euros seems counterintuitive, considering Bitcoin’s value has surged over 20,754% since 2015, while the euro’s purchasing power declined by 39% between 2000 and 2020. As one X user put it, “Make it make sense.”
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