Germany Floods Market with 50,000 Seized Bitcoin

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The German government is flooding the crypto market with Bitcoin. As of Wednesday, it has transferred at least $615 million worth of Bitcoin to various crypto exchanges and market entities, according to data from Arkham Intelligence.

The government has sold off nearly 50,000 Bitcoin, which it seized in mid-January. At the time of capture, these assets were valued at approximately $2.1 billion. The Bitcoin was confiscated by police in the eastern German state of Saxony through a “voluntary transfer” from suspects accused of operating Movie2k.to, a film piracy website active in 2013.

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On-chain data indicates Bitcoin moving in and out of the German Government (BKA) wallet beginning in late January. Currently, 13,111 Bitcoin remain in the BKA wallet, valued at around $759 million at the time of publication. This suggests that about 75% of the seized assets have been sold so far.

The prospect of $2.1 billion in Bitcoin entering the market could have unsettled some investors, as Germany’s sales have coincided with recent price corrections. According to CoinGecko data, Bitcoin’s latest decline began on June 6, aligning with when the BKA outflows started to accelerate. Since then, Bitcoin has dropped around 19% and is now trading at roughly $57,000.

“There are indeed ‘market fears’ about Germany’s sell-off of its Bitcoin inventory,” admits OKX Chief Commercial Officer Lennix Lai. Adding to the sell pressure, Mt. Gox recently commenced Bitcoin repayments worth $9 billion to creditors, and the U.S. government has sold seized Silk Road and Banmeet Singh coins.

“All of this not only applies legitimate sell pressure into the market but also telegraphs the selling to market participants, giving them the opportunity to sell in anticipation of these events occurring,” said Zach Bruch, founder and CEO of crypto casino MyPrize, to Fortune. Anticipation of the sales intensified their impact.

However, taking a step back, 50,000 Bitcoin represents just 0.25% of the total supply of approximately 19,700,000 that have been mined so far. “While such sell-offs may result in short-term volatility, the Bitcoin market tends to have adequate liquidity to absorb them and rebound fairly quickly. It’s unlikely that these sell-offs will trigger a landslide drop in Bitcoin price,” Lai told Fortune.

Despite Bitcoin’s downturn in recent weeks, spot ETFs have received fresh capital after weeks of outflows, which may be mitigating the price drop. According to CoinGlass data, since June 25, these funds have seen net inflows of $886.8 million.

While central banks hold large reserves of foreign currencies—such as the U.S. holding at least $35 billion worth of euros and yen—the German government has chosen a mass sell-off policy. This has prompted criticism from the crypto community, not only because of its impact on supply and demand but also questioning the logic behind selling Bitcoin for euros. While Bitcoin’s value has soared by over 20,754% since 2015, the euro’s purchasing power declined by 39% between 2000 and 2020. “Make it make sense,” one X user wrote.