Is the UK Next to Abandon Bitcoin After Germany? Brace for Another Drop in BTC Prices
The UK could potentially follow in Germany’s footsteps regarding a Bitcoin sell-off frenzy, with speculations arising amidst pressure on the new Chancellor of the Exchequer, Rachael Reeves, to finance her economic strategies. Reports suggest that Reeves might consider selling the UK’s seized Bitcoin assets, estimated at around £3.9 billion or $5 billion, to bolster her economic agenda. These Bitcoin holdings were acquired by the British government through legal actions, including a significant case against money launderer Jian Wen, where assets, including BTC valued at roughly £2 billion, were secured by the Crown Prosecution Service.
Despite the absence of crypto in Prime Minister Keir Starmer’s manifesto, uncertainties linger on how the new administration will approach BTC and cryptocurrencies following a decisive victory. The previous Conservative-led government, under former PM Rishi Sunak, aimed to enforce extensive crypto regulations and position Britain as a global Web3 innovation center.
Data from the crypto intelligence platform Arkham reveals that the UK government possessed approximately 61,245 Bitcoins as of July 19, amounting to over $4 billion. With the current value standing at £3.9 billion, Reeves has a significant financial asset at her disposal. However, liquidating these assets could potentially trigger a notable decline in BTC price, akin to the repercussions observed after Germany’s recent substantial Bitcoin sell-off, where the government sold close to 50,000 BTC, leading to a 15% price decrease.
While selling the bitcoins could offer immediate financial resources for Reeves’ economic plans, it might introduce market instability, causing further downturns in BTC and impacting the broader crypto market. Alternatively, Reeves could weigh the short-term financial benefits against the potential long-term market implications. Suggestions propose that a more strategic approach could involve easing crypto regulations to counterbalance the anticipated market effects.
Another approach could be to retain BTC, await higher prices, and even accumulate more as a reserve asset. Notably, industry figures like MicroStrategy and its founder, Michael Saylor, endorse crypto as a superior hedge against inflation. Countries such as El Salvador, led by President Nayib Bukele, have advocated for BTC investments, realizing substantial profits. Charlie Morris of Bytecoin highlighted the UK’s current anti-crypto stance and proposed that relaxing regulations could attract investments and showcase the government’s backing for technology and innovation, potentially mitigating the adverse outcomes of a BTC sell-off.
Market observers and crypto enthusiasts are eagerly anticipating Reeves’ decision, particularly with the rise in international criminal exploitation of BTC, which could lead to more crypto assets falling under government control. Bitcoin has shown signs of recovery from recent fluctuations, currently trading above $65,000 and experiencing a slight drop to $63,246 within a day, reflecting the volatile nature of the market. Its trading volume has surged by over 14%, reaching $32 billion, with the current trading price at $66,340.
