For the past few weeks, Germany has been quietly shaking the cryptocurrency world, offloading hundreds of millions of dollars worth of bitcoin and triggering a significant sell-off in the market.
The German government, through its Federal Criminal Police Office (Bundeskriminalamt or BKA), began liquidating bitcoin from a seized stash last month. These bitcoins were originally confiscated from Movie2k.to, a now-defunct movie piracy website.
In June, the BKA sold 900 bitcoins, valued at around $52 million as of Monday. This was just the beginning. Last week saw an additional sale of 3,000 bitcoins worth approximately $172 million. The spree continued on Monday with another 2,739 bitcoins sold, equating to $155 million. The government has been moving its cryptocurrency reserves to exchanges like Coinbase, Bitstamp, and Kraken, contributing to the intense sell-off that has driven bitcoin prices down significantly.
Bitcoin’s value dropped below $55,000 on Friday, marking its lowest point since February 2024, according to CoinGecko data. The entire crypto market lost over $170 billion in market capitalization within 24 hours, highlighting the impact of these sales.
However, Germany’s actions aren’t the sole cause of anxiety for crypto investors. The ongoing payout from the collapsed bitcoin exchange Mt. Gox has also put pressure on the market. Mt. Gox, which went bankrupt in 2014, has begun repaying its creditors in bitcoin and bitcoin cash, further flooding the market with cryptocurrency.
Although the sales by Germany and Mt. Gox represent a fraction of bitcoin’s total issuance—around 19.7 million bitcoins valued at $1.1 trillion—the psychological impact on the market is substantial. Despite being relatively minor in scale, these sales have significantly affected market sentiment.
Bitcoin’s price remains up by 89% over the past year. In January 2024, Saxony police seized close to 50,000 bitcoins, valued at about $2.2 billion at the time, marking the largest bitcoin seizure in German history. These funds, now managed by the BKA, total roughly 32,488 bitcoins, worth about $1.9 billion today.
Not everyone supports the German government’s decision to sell its bitcoin holdings. Joana Cotar, a Bundestag member, argues that the government should retain bitcoin as a strategic reserve currency. She has voiced her concerns to Chancellor Olaf Scholz, Finance Minister Christian Lindner, and Saxony Minister President Michael Kretschmer, suggesting that the sales are counterproductive.
(Source: CoinDesk | The Block)
