German Government’s $2 Billion Bitcoin Holdings Cause Concern Among Crypto Investors
Germany’s government has been actively involved in selling off significant amounts of bitcoin, contributing to the recent downturn in the cryptocurrency market. The sales, initiated last month, involve the disposal of bitcoin from a wallet managed by the country’s Federal Criminal Police Office, known as the Bundeskriminalamt or BKA.
According to data from blockchain analysis firm Arkham Intelligence, the BKA sold 900 bitcoins in June, valued at around $52 million. Subsequently, additional sales of 3,000 bitcoins, worth approximately $172 million, and 2,739 bitcoins, equivalent to $155 million, were conducted last week and on Monday, respectively. These transactions have been channeled to various exchanges, including Coinbase, Bitstamp, and Kraken.
The impact of Germany’s bitcoin sales on the market has been profound, with bitcoin prices plummeting below $55,000 last Friday, marking the lowest level since February 2024. The broader crypto market also experienced a sharp decline, shedding over $170 billion in combined market capitalization within a 24-hour period, as per CoinGecko’s data.
Apart from Germany’s bitcoin sales, another factor influencing the cryptocurrency’s value is the redistribution of billions of dollars’ worth of bitcoin from the collapsed Mt. Gox exchange to creditors. Nobuaki Kobayashi, the trustee overseeing the Mt. Gox bankruptcy estate, confirmed the initiation of repayments in bitcoin and bitcoin cash to certain creditors through designated crypto exchanges.
Despite the substantial sums involved in these transactions, they represent only a fraction of the total bitcoin supply. Currently, there are approximately 19.7 million bitcoins in circulation, valued at $1.1 trillion. Market sentiment has been impacted by these sales, according to James Butterfill, head of research at CoinShares, although bitcoin’s price remains 89% higher over the past year.
In a separate development, the seizure of nearly 50,000 bitcoins in Saxony, Germany, in January 2024, amounting to around $2.2 billion at the time, highlights the country’s significant holdings in bitcoin. The funds, confiscated from the operators of the Movie2k.to piracy site, were transferred to a crypto wallet controlled by the Federal Criminal Police Office.
Criticism has arisen regarding Germany’s decision to sell its bitcoin reserves, with calls for the tokens to be retained as a strategic reserve currency. Joana Cotar, a member of the German Bundestag, expressed disapproval of the sales, advocating for the government to preserve bitcoin. Cotar has urged German officials to reconsider their approach and invited them to a lecture featuring prominent bitcoin influencer Samson Mow in Berlin.
Germany’s involvement in bitcoin sales, alongside the broader market dynamics, underscores the evolving landscape of cryptocurrencies and their influence on global financial markets.
