Bitcoin
Germany begins selling its billions of bitcoins, sparking volatility fears
The German government is beginning to sell its considerable stockpile of Bitcoin which was seized from the operators of a movie piracy website, sparking concerns about its potential impact on the cryptocurrency market.
The government apparently sold more than $195 million worth of BTC in the last 24 hours, according to to blockchain analytics firm Arkham, and moved even larger sums on Wednesday between multiple wallets.
This significant move follows a recent pattern of large-scale Bitcoin transactions initiated by German authorities, with substantial amounts being funneled to major exchanges such as Coinbase, Kraken and Bitstamp. This could hint at even more sales to come.
In the latest transactions, the German government transferred US$65 million in BTC for probable exchange deposits, adding to the US$130 million moved yesterday. Despite these apparent massive sales, German authorities still hold a substantial $3.05 billion worth of Bitcoin.
This extensive cache of Bitcoin, nearly 50,000 BTC, was originally seized from the operators of Movie2k.to, a movie piracy website that was last active in 2013. The Bitcoin was transferred to the German Federal Criminal Police Office (BKA ) in mid-January. a voluntary surrender of the suspects, by Arkham.
The large-scale sale has already had a notable impact on Bitcoin’s market price, according to Robert Quartly-Janeiro, chief strategy officer at crypto exchange Bitrue. He also believes this suggests a bearish outlook for the German government.
“Having seen slippage in the price of BTC, the German government is releasing significant portions of BTC and considered that the price of BTC should slow down for a while,” he said. Decrypt. “It is worth remembering that the sold BTC was seized due to illicit activities, so what is more interesting is what the German government is planning to do with the capital once it is sold.”
He added that as a result, the size of the selloff dragged BTC lower. Bitcoin is down around 0.5% in the last 24 hours to a current price of around $64,700, pushing its 14-day decline to nearly 9% at the time of this writing. Quarterly-Janeiro believes there is clearly a strategy at play and that the timing of the next tranche to be sold will be revealing.
“Could they close the position completely? Maybe so,” he said.
Ben Kurland, CEO of token management platform DYOR Labs, highlighted the historic implications of such sales in a comment to Decrypt.
“Historically, significant Bitcoin sales by governments lead to immediate price drops and short-term volatility,” he said. “The medium-term effects could vary, however, prolonged selling would cause further declines as negative sentiment grows. The remaining BTC is sold or withdrawn from exchanges, as government-held BTC is unlikely to remain on centralized exchanges for long.”
The ongoing sell-off by the German government has injected a dose of volatility into the crypto market, with investors and market analysts keeping an eye on new moves and potential impacts on the price of Bitcoin.
James Davies, Co-Founder and Chief Product Officer at Crypto Valley Exchange, said Decrypt that he does not believe there is “any market sentiment behind” the sale, and that it is likely “more a function of not holding assets in Bitcoin” with the police department “simply slowly liquidating this seizure.”
In any case, he expects it to be a “favorable time for OTC traders” but one that will result in “some short- to medium-term volatility for the rest of us.”
Edited by Andrew Hayward
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.