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German Government’s $354M BTC Sell-Off Signals Potential for Increased Volatility

ByDayne Lee

Jul 11, 2024

German Government’s $354M BTC Sell-Off Signals Potential for Increased Volatility

The wallet labeled “German Government (BKA)” on Arkham Intelligence has loaded up 6,000 more Bitcoin worth $354 million in preparation for the next round of BTC sell-offs. This move signals another potential wave of market volatility as large quantities of Bitcoin are introduced into the market.

Recent Movements and Exchange Involvement

So far, 5,853.409 BTC has been sent to addresses associated with exchanges such as Coinbase, Kraken, Flow Traders, and other unidentified or unconfirmed addresses. This indicates that the next attempt to offload roughly $342 million worth of BTC has already begun.

This ongoing distribution of the 6,000 BTC follows the outflow of 3,100 BTC worth $178 million on July 9. Additionally, the address withdrew 1,700 BTC worth $91.78 million from Bitstamp, indicating an inability to off-load them on the exchange.

On July 9, the holdings stood at around 26,000 BTC, worth roughly $1.5 billion. The linked address used for off-loading the funds held 4,800 BTC. As of July 10, the wallet’s current holdings are approximately 18,110 BTC, now worth $1.06 billion, marking a decline of over $400 million since July 9.

Seizure and Origin of Funds

Speaking with Cointelegraph, Dr. Lennart Ante, the CEO of Blockchain Research Lab, explained that investigators from the federal state of Saxony seized the BTC funds. Ante noted that the funds originated from the illegal streaming portal Movie2k and that one of the defendants facilitated the voluntary transfer of the funds.

“The Public Prosecutor General’s Office has sole authority over the confiscated Bitcoins. The BKA (German State Police) just provides the wallets through which the transactions are processed,” said Ante.

Ante detailed that the proceeds from the funds go to the state budget of the Free State of Saxony. However, victims of the Movie2k portal, such as filmmakers, could have a claim to parts of it, which will be decided by the courts.

Despite the ongoing sell-off and the dumping of over $1 billion in BTC into the market so far, the price of BTC has steadily risen back to highs of $58,000 after hitting lows of $53,900.

Ante questioned the efficiency of the Saxon government’s sales strategy, suggesting that auctions or OTC deals might be more effective. He added, “If Bitcoin wants to live up to its role as a global financial asset and digital gold, the market must be able to withstand such events.”

Remaining BTC Holdings

Of the reportedly almost 50,000 BTC seized by the Public Prosecutor General’s Office, only around 13,110 BTC worth $770 million remain. This reduction has led to the reported German government losing its BTC billionaire status.

The Code of Criminal Procedure (StPO) § 111p outlines the procedure and regulations for an emergency sale of confiscated or seized objects during criminal investigations in Germany. It details that objects confiscated under § 111c or seized under § 111f can be sold if there is a risk of significant loss of value, threat of spoilage, or costs or difficulties associated with storage, maintenance, or upkeep.

The BTC sell-off by the reported German government address coincides with the initiation of long-awaited BTC and Bitcoin Cash (BCH) repayments to creditors by Mt. Gox.

Discussing market sentiment, Ante noted that the ongoing event “may be forgotten in a few months, and new events, such as the Mt. Gox payouts, may be the subject of debate.” He suggested that such sales might lead to a broader distribution of Bitcoin ownership, which could be positive for Bitcoin in the medium term.

At the time of writing, BTC’s price is $58,545, and the total cryptocurrency market capitalization is $2.15 trillion, up 1.39% over the last 24 hours.

DateEventBTC AmountValue (in USD)Remarks
July 9Outflow to Exchanges5,853.409$342 millionInvolved Coinbase, Kraken, Flow Traders, and others
July 9Withdrawal from Bitstamp1,700$91.78 millionIndicated inability to off-load on exchange
July 10Current Holdings18,110$1.06 billionDown from 26,000 BTC
OngoingTotal BTC Seized~50,000VariedFrom illegal streaming portal Movie2k
CurrentRemaining BTC13,110$770 millionLost BTC billionaire status

The German government’s continued sell-off of Bitcoin raises questions about market impact and the efficiency of their sales strategy. While significant amounts of BTC are being introduced into the market, the resilience shown by Bitcoin’s price suggests that the market may be able to withstand these events. As regulatory frameworks evolve and more BTC is distributed, the overall impact on the cryptocurrency landscape will become clearer.

Featured image credit: DALL-E by ChatGPT

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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