The German government, through its labeled cryptocurrency wallet, has recently sold an additional $900 million worth of Bitcoin, igniting concerns about potential downward pressure on Bitcoin prices. On July 8, on-chain data from Arkham Intelligence revealed that the wallet, associated with the Bundeskriminalamt (BKA), transferred approximately 16,309 Bitcoin in multiple transactions to various external addresses. This marks the largest single-day Bitcoin liquidation by this wallet.
Significant Transfers to Exchanges and Market Makers
The transactions included substantial transfers to well-known crypto exchanges and market makers:
Kraken: 200 BTC
Bitstamp: 400 BTC
Coinbase: 400 BTC
Additionally, 700 BTC, worth over $38.5 million, was sent to the mysterious wallet "139Po," which has previously received significant amounts from the German government, including transfers of 550 BTC on July 2, 500 BTC on June 25, and 800 BTC on June 20.
Impact on Bitcoin Prices
Following these transfers, Bitcoin's price experienced a notable drop during the European trading session, falling as much as 6.75% from a high of $58,200 to a low of $54,278. The cumulative transfer amounted to 8,700 BTC.
The German government's selling spree has significantly reduced its Bitcoin holdings. According to Arkham data, the holdings have decreased from 50,000 BTC to 23,788 BTC, worth approximately $1.3 billion since the sell-off began in June.
Market Liquidations and Support Levels
This substantial selling activity triggered massive liquidations across the crypto market. CoinGlass data indicates that leveraged positions worth $425 million were liquidated, with $216 million in long liquidations. Over the last 24 hours, $189 million in Bitcoin positions were liquidated, including $81 million in long BTC positions.
Bitcoin found significant support at the $54,700 mark. However, a drop below this level could potentially trigger the liquidation of approximately $750 million worth of leveraged long positions across various exchanges, according to CoinGlass.
Mt. Gox Repayments and Additional Selling Pressure
Adding to the selling pressure, the long-awaited repayment process for creditors of the defunct crypto exchange Mt. Gox has commenced. The trustee, Nobuaki Kobayashi, announced on July 5 that repayments in Bitcoin and Bitcoin Cash (BCH) have started through several designated crypto exchanges. The total balance to be repaid stands at $9 billion worth of BTC and BCH.
Bitstamp, one of the exchanges involved, aims to quickly distribute its portion of the Bitcoin repayments, potentially introducing further selling pressure. Blockchain analytics firm Arkham Intelligence reported that $2.71 billion was moved from Mt. Gox wallets, presumably in preparation for these repayments.
Market Outlook
Despite the current selling pressure, many market participants remain optimistic about Bitcoin's long-term prospects. They anticipate that Bitcoin prices will recover and continue the bull market once the selling pressure from the German government and Mt. Gox repayments subsides.
At the time of publication, Bitcoin was trading at $56,433, down 1.52% over the last 24 hours. The market remains cautious. Market analysts are forecasting a substantial dip in Bitcoin prices in the coming hours, driven by a confluence of recent large-scale sell-offs and upcoming liquidation events.Traders are advised to exercise caution as the market navigates these turbulent waters. The next few hours could see heightened volatility and a significant dip in Bitcoin prices, prompting many to reconsider their positions and risk management strategies.