Recently, the price of Bitcoin has suffered another sharp drop, which has attracted widespread attention in the market. What is particularly noteworthy is that Bitcoin held by major governments and early miners around the world is flowing into exchanges in large quantities, triggering a panic of selling in the market. At the same time, the Mt.Gox liquidation plan, known as the "Bitcoin burden", is also being promoted, further exacerbating market concerns, and the entire cryptocurrency market is experiencing unprecedented selling pressure.
US Government Transfers Bitcoin
On June 27, according to data from blockchain analysis company Chainalysis, the U.S. government recently transferred about 4,000 bitcoins (worth about $240 million) to the Coinbase exchange. This huge bitcoin transfer immediately triggered a sharp fluctuation in the cryptocurrency market, with the price of bitcoin plummeting by 6% in a short period of time.
Analysts pointed out that this batch of bitcoins may come from illegal assets confiscated by the US government. The government's choice to transfer and sell these bitcoins through Coinbase may indicate that it plans to continue to sell cryptocurrencies on a large scale in the future. Although these bitcoins will not cause drastic fluctuations in the market, the number of bitcoins that the US government will sell this time is still unclear (there are still 213,000 bitcoins in the current wallet, making it the third largest bitcoin whale in the world), and in the midst of a sluggish market, any disturbance may have an impact, which is worth investors' continued observation.
The US government's bitcoin selling operation was interpreted by the market as a possible trigger for a second round of bitcoin price decline. As we all know, once a government agency sells a large amount of cryptocurrencies, it usually has a greater suppressive effect on the market, causing a sharp drop in prices. Analysts pointed out that if the US government continues to transfer more confiscated bitcoins to exchanges, the decline in bitcoin prices may continue in the future.
German government steps up selling
"Government selling" has become one of the important factors that put pressure on Bitcoin prices. Recently, the German government once again sold Bitcoin, transferring 650 BTC (about 40.29 million US dollars) to the exchanges Coinbase, Bitstamp and Kraken. It is reported that this is the second time the German government has sold Bitcoin recently (Related reading: National-level selling pressure! The German government sold 50,000 Bitcoins! The whale arbitrages 1.2 billion US dollars in two weeks! How will the market trend in the future?). At present, the German Federal Criminal Police (BKA) still holds 45,264 Bitcoins, worth about 2.76 billion US dollars.
According to data, in the past month, the German government has transferred about $150 million worth of Bitcoin to Bitstamp and Kraken exchanges, and the subsequent liquidation directly impacted the price trend of Bitcoin. These transactions caused the German government's ranking in global government Bitcoin holdings to fall from second to fifth.
Analysts pointed out that there are two main reasons behind the German government's move: first, it hopes to fill the gap in the national fiscal budget by cashing in its bitcoins; second, considering the overall downturn in the current cryptocurrency market, the German government hopes to cash out as soon as possible when prices are high to avoid the risk of further declines.
However, the German government's continuous selling behavior will undoubtedly increase the selling pressure of Bitcoin, becoming an important factor in suppressing the upward movement of Bitcoin prices in the short term. Especially in the current unstable macroeconomic environment, such selling behavior may trigger a chain reaction and bring a heavy blow to the entire cryptocurrency market.
Mt.Gox Creditor Repayment Plan
On the other hand, the Mt.Gox liquidation case, known as the "bitcoin burden", has also attracted much attention. Mt.Gox was once the world's largest bitcoin exchange, but in 2014, the largest bitcoin theft in history occurred, resulting in the theft of 940,000 bitcoins and heavy losses. Only recently has there been new progress in the creditor compensation plan for the Mt.Gox bankruptcy case.
As a result, the crypto market staged a "dive" and Bitcoin once fell below the $60,000 mark. But things seem to have reversed again. In the end, compensation was made based on the 2014 value of Bitcoin, $483, rather than the current value or the number of lost Bitcoins, so the impact of this liquidation plan on the entire market may not be as great as previously expected.
Specifically, Mt. Gox eventually recovered 15% of its losses, a total of 141,868 bitcoins. However, due to the rise in the price of bitcoin (US$451 at the time of bankruptcy and the assessed price on May 13 was US$63,500), if calculated in US dollars, the creditors' income increased 140 times.
If creditors choose to pay in advance, they can only receive 90% of the bitcoins (10% haircut). Galaxy expects that 75% of creditors will choose this option, which means that about 95K bitcoins will be paid to creditors in advance. Among them, 20k bitcoins belong to the claim fund, 10k to BitcoinicaBK, and the remaining 65k are independent creditors.
With about 65K bitcoins of independent creditors, it is predicted that only 10% will choose to sell immediately, which means that the selling pressure is only 6,500 bitcoins. Because these independent creditors are tech-savvy early bitcoin adopters, they tend to hold bitcoins for a long time and are not in a hurry to sell bitcoins immediately.
Summarize
It is also worth noting that recently some of the "Satoshi Nakamoto miners" who have been dormant for 14 years have liquidated and cashed out, making a profit of more than 1 million times. This reflects that the bitcoins held for a long time by some early Bitcoin miners may be gradually flowing into the market.
This massive selling by miners may mean that the selling pressure from the "sleeping" wallets of miners that previously supported the price of Bitcoin has reached a critical point. If more such liquidation events occur in the future, it will inevitably further increase the downward pressure on the entire market. However, the selling pressure is not expected to be too large, because most early miners may choose to hold for a long time rather than sell in large quantities.
Overall, the current market is turbulent, but it may just be a temporary adjustment, and there is hope for an upward trend in the future. Investors may maintain a cautious and optimistic attitude, pay close attention to market changes, and do a good job in avoiding and managing investment risks.
