The German government has been actively selling its substantial Bitcoin holdings, contributing significantly to the recent decline in the cryptocurrency market. Over the past few weeks, the Federal Criminal Police Office (BKA) has liquidated hundreds of millions of dollars worth of Bitcoin, leading to a sharp sell-off that pushed Bitcoin’s price below $60,000 for the first time since mid-May.
In January 2024, authorities in Saxony seized nearly 50,000 Bitcoins, valued at approximately $2.2 billion at the time. This was the result of a crackdown on Movie2k.to, a prominent movie piracy website. The seized assets were transferred to a digital wallet controlled by the BKA.
Recent on-chain data reveals that the German government began selling Bitcoin from this wallet in June. The BKA sold 900 Bitcoins worth around $52 million. In the following week, an additional 3,000 Bitcoins, valued at approximately $172 million, were sold, and a further 2,739 Bitcoins worth about $155 million were liquidated shortly after. These transactions have been carried out through major cryptocurrency exchanges, including Coinbase, Bitstamp, and Kraken.
The aggressive sale of these assets has had a pronounced impact on the cryptocurrency market. Bitcoin’s price plummeted below $55,000 on Friday, reaching its lowest level since February 2024. This dramatic fall also saw the entire cryptocurrency market lose over $170 billion in combined market capitalization within a 24-hour period.
The sell-off by the German government is not the only factor exerting pressure on Bitcoin. The repayment of billions of dollars’ worth of Bitcoin and Bitcoin Cash to creditors from the collapsed Mt. Gox exchange has also added to the market’s woes. The Mt. Gox trustee confirmed that repayments have begun, further unsettling investors.
Currently, the BKA controls approximately 32,488 Bitcoins, valued at nearly $2 billion at present market rates. The decision to liquidate these holdings has sparked debate within Germany. Some lawmakers have argued that the government should retain its Bitcoin reserves as a strategic asset rather than selling them off.
As the German government continues its Bitcoin liquidation strategy, the cryptocurrency market remains highly volatile. Investors and market watchers are closely monitoring the situation, with concerns about how ongoing sales and other external pressures might influence future market sentiment. Despite the recent downturn, Bitcoin remains up nearly 90% over the past year, highlighting the enduring volatility and speculative nature of the cryptocurrency market.