Bitcoin
Will the UK abandon Bitcoin after Germany’s move? Is another BTC crash coming?
Following Germany’s recent Bitcoin sell-off, the cryptocurrency market is speculating whether the UK could follow Germany’s lead as new Chancellor of the Exchequer Rachael Reeves is under pressure to fund her economic plans. Given that the UK government holds a substantial stash of BTC, if Reeves decides to sell, rumors suggest a potential market crash.
The UK currently holds over $4 billion in BTC
According to a report by Bloomberg, Reeves may sell the UK’s seized Bitcoin assets, valued at around £3.9 billion or $5 billion, to support his economic agenda. The British government acquired these Bitcoin holdings through legal action, including a major case against money launderer Jian Wen. The Crown Prosecution Service secured Wen’s assets, including BTC, which were valued at around £2 billion at the time.
With crypto absent from Prime Minister Keir Starmer’s manifesto, questions remain about how the new administration will treat BTC and cryptocurrencies following a landslide victory. The previous Conservative-led regime, led by former PM Rishi Sunak, sought to implement comprehensive crypto regulations and transform Britain into a global hub for Web3 innovation.
Will the UK follow Germany’s move?
According to data from crypto intelligence platform Arkham, the UK government held approximately 61,245 Bitcoins as of July 19, worth over $4 billion. With the current value at £3.9 billion, Reeves has a substantial resource at his disposal. However, selling the assets could result in a substantial drop in the price of BTC, similar to what occurred after the recent major Bitcoin sell-off in Germany. Notably, the German government sold almost 50,000 BTC, contributing to a 15% price drop.
Is there an alternative way out?
While selling bitcoin could provide quick funds for Reeves’ economic plans, the move could lead to market volatility, and BTC could fall further, impacting the broader cryptocurrency market. However, Reeves may consider balancing the immediate financial gain with the likely long-term market consequences. The report suggests that a more strategic approach could involve relaxing cryptocurrency regulations to offset the potential market impacts.
The alternative path is to hold BTC, wait for higher prices, and even acquire more as a reserve asset. Notably, MicroStrategy and its founder Michael Saylor have touted crypto as a superior hedge against inflation. Sovereign nations like El Salvador under President Nayib Bukele have also advocated BTC investments and made millions of dollars in unrealized profits.
Bytecoin’s Charlie Morris noted the UK’s current anti-crypto stance. Relaxing regulations could attract investment and showcase the new government’s support for technology and innovation. Such a move could mitigate the negative effects of a BTC sell-off.
Market awaits Reeves’ decision as Bitcoin recovers
Market analysts and crypto enthusiasts will be closely watching Reeves’ decision. With international criminals increasing their use of BTC, more crypto assets could come under government control.
Bitcoin has recovered from its recent dip and is trading above the $65,000 mark. In the past day, it has fallen to $63,246, reflecting the volatile market scenario. Its trading volume has also increased by over 14%, reaching $32 billion at the time of writing. It is currently trading at $66,340.