Bitcoin’s Decline In July Due to German Govt. Sell-off

The German government’s move to sell off nearly 50,000 BTC sent shockwaves throughout the entire crypto industry. This unprecedented sale of the seized assets, which started in June 2024, aims to rapidly offload billions in digital assets. The decision sparked intense debate over its economic implications. This article will give you a clear view of the German government’s sell-off and its effects on Bitcoin’s price.  

Germany’s Massive Bitcoin Selloff

Seizure of 50,000 BTC

In January 2024, the Saxony police, in cooperation with the Federal Criminal Police Office (BKA) and other departments, seized nearly 50,000 BTC. They confiscated the Bitcoin worth 3.26 billion at press time from an operator of the now defunct and illegal platform Movie2k.to. Movie2k was a well-known platform that was involved in the distribution of unauthorized copyrighted material. The website, which was active from 2008 to 2013, had an extensive array of content with thousands of movies, TV shows, and other content from all over the world. Later, in 2013, the Motion Picture Association of America (MPAA) shut it down because of copyright infringement.

The two platform operators were a 40-year-old German man and a 37-year-old Polish man. One of the two operators, who had been in custody since November 2019 for suspected money laundering, had agreed to transfer his crypto wallet to the German government. Both operators purchased large amounts of Bitcoin using proceeds obtained through the website. 

The Increased Efforts to Sell Bitcoin 

The German government started selling the seized Bitcoins worth billions on June 19, but it was only in July that the massive sell-offs began. On July 1, the German government moved 1,500 BTC, which was worth nearly $95 million, to various exchanges. Based on the data from Arkham Intelligence, an onchain analytics platform, nearly 2,700 BTC have been moved to exchanges like Bitstamp, Coinbase, and Kraken over the past two weeks.   

On July 2, the German government’s wallet sold Bitcoin worth $52 million, sparking the debate about whether the government plans on selling its entire collection of Bitcoin holdings. Furthermore, on July 4, more than 3,000 BTC worth $172 million were moved from the German wallet. According to PeckShieldAlert, a blockchain investigator, of the 3,000 BTC moved, 1.3k BTC were transferred to three major crypto platforms: Kraken, Coinbase, and Bitstamp. Meanwhile, the other 1.7k tokens were sent to a wallet address 139PoPE1bKQam8QJjhVjYDP47f3VH7ybVu. 

In response to the repeated large-scale sell-offs by the German government, German MP, a lawmaker, and Bitcoin activist Joana Cotar said that selling Bitcoins like this wasn’t productive and sensible. Instead, it could diversify treasury assets and shield against currency devaluation if we adopt it as a “strategic reserve currency.”  

On July 5, the German government had 42,274 Bitcoins, but by July 8, it had only 23,788 BTC remaining. According to data collected through Arkham Intelligence, Bitcoins worth more than $1 billion were transferred just on July 8th, making it one of the largest sell-offs by the German government. On the next day, 3,100 BTC were sold within the span of just one hour, of which 2,500 were sent to an unknown B2C2 Group, 400 BTC to Kraken, and the last 200 to an unknown wallet. The German government had around 26,000 BTC (after experiencing a few inflows), and the address used to off-load coins holding 4,888 BTC.   

The German government loaded another 6,000 Bitcoins for sell-offs on July 10. Of these, 5,853 were sent to addresses associated with exchanges and unidentified wallets. According to Arkham Intelligence, on July 11, the German government sent 10,620 BTC worth $615 million to Coinbase, Kraken, Bitstamp, Flow Traders, and two other anonymous wallets. However, shortly after the funds were sent, some of them were transferred back to the government wallet, bringing the total amount of Bitcoin held by the German government to above 9,000 BTC.     

By July 12, the German government had sold nearly 88.4% of the total 50,000 BTC. On that day, the government transferred 3,200 Bitcoins to various platforms and a few unknown addresses, bringing the total amount of Bitcoin held to 5,800 BTC. Furthermore, on the same day, they managed to sell off the remaining Bitcoins, bringing an end to the selling spree that lasted for weeks.  

After the massive sell-off by the German government, the Bitcoin market saw a steady rise, with prices reaching $65,210 on July 16. The sale of nearly 49,858 BTC within a period of three and a half weeks netted the German government a profit of $2.8 billion. However, some claim that if the German government had sold the coins at a steady pace instead of selling them in a hurry, they could have earned a lot more profit.

Bitcoin’s Decline Due to German Government Sell-Off

Starting in the first week of July, the German government began mass selling its Bitcoin holdings. The market immediately reacted, with Bitcoin prices experiencing a massive dip from the initial $62,905 on July 1 to $56,637 on July 5. On July 4, in fear of the continued Bitcoin selling pressure, Justin Sun, founder of Tron, offered to buy the German government’s Bitcoin holdings worth over $2.3 billion in an attempt to minimize the impact on the market. Furthermore, the prices dipped even further to $55,854 when the German government sold roughly 16,309 BTC on July 8. 

Conclusion

The German government’s aggressive sell-off of nearly 50,000 BTC seized from the illegal platform Movie2k.to significantly impacted the Bitcoin market in July 2024. Initially worth $3.26 billion, the sell-off aimed to liquidate the assets rapidly, which led to a substantial dip in Bitcoin prices from $62,905 to $55,854. Despite raising $2.8 billion from the sales, critics argue that a more gradual approach could have yielded higher returns. Notably, Bitcoin activist Joana Cotar suggested holding Bitcoin as a strategic reserve to protect against currency devaluation. The mass sell-offs concluded on July 12, after which Bitcoin prices rebounded to $65,210. This event underscores the potential volatility caused by large-scale governmental actions in the cryptocurrency market.