TLDR

  • The German government has rapidly reduced its Bitcoin holdings from about $3.46 billion to less than $1 billion in the past month.

  • The Bitcoin being sold comes from a seizure of nearly 50,000 BTC from the movie piracy site Movie2k.to.

  • The state of Saxony is responsible for selling the Bitcoin, following standard procedures for liquidating seized assets.

  • The German government has been transferring large amounts of Bitcoin to exchanges like Bitstamp, Kraken, and Coinbase, as well as to market makers.

  • Despite the sell-off, some analysts remain bullish on Bitcoin’s long-term prospects, with Bernstein projecting a price of $200,000 by 2025.

The German government has been rapidly selling off a large portion of its Bitcoin holdings. Over the past month, Germany has reduced its Bitcoin reserves from approximately $3.46 billion to less than $1 billion, according to data from blockchain analytics platform Arkham Intelligence.

The Bitcoin being sold comes from a seizure of nearly 50,000 BTC by the eastern German state of Saxony. These coins were confiscated earlier this year from the operators of Movie2k.to, a now-defunct movie piracy website, as part of a criminal investigation into money laundering and illegal activities.

Contrary to some misconceptions, it’s not the federal government of Germany that’s directly handling the sale. Instead, the state of Saxony is responsible for liquidating the seized assets.

Dr. Lennart Ante, CEO and co-founder of Blockchain Research Lab, explained that this is a standard procedure for handling confiscated property, albeit on a larger scale than usual.

The sell-off has been carried out through a series of transfers to various cryptocurrency exchanges and market makers.

Large amounts of Bitcoin have been moved to platforms such as Bitstamp, Kraken, and Coinbase, as well as to over-the-counter (OTC) desks and market makers like B2C2 Group.

For instance, on July 10, 2024, the German government transferred 375 BTC each to Bitstamp, Kraken, and Coinbase, totaling 1,125 BTC (approximately $65.5 million).

As of July 11, 2024, the German government’s Bitcoin wallet held approximately 13,177 BTC, valued at about $766.27 million. This represents a significant decrease from the 49,860 BTC held just a month ago.

BREAKING: U.S. #Bitcoin ETFs are scooping up almost exactly the same amount of #Bitcoin that is sold by #Germany.

We are witnessing a real time intergenerational transfer of wealth between nations. What a time to be alive. pic.twitter.com/6HPv2A12mF

— Carl ₿ MENGER ⚡???????? (@CarlBMenger) July 9, 2024

The rapid sell-off has sparked discussions in the cryptocurrency community. Some critics, including German Bundestag member and Bitcoin advocate Joana Cotar, have called the move “counterproductive.”

However, officials maintain that they are following legal obligations and standard procedures for handling seized assets.

While Germany has been selling, U.S. spot Bitcoin ETFs have been buying. Data suggests that these funds are purchasing Bitcoin at nearly the same rate as Saxony is selling, indicating ongoing institutional interest in the cryptocurrency.

Despite the large-scale selling, some market analysts remain optimistic about Bitcoin’s future. Investment firm Bernstein, for example, has maintained its bullish stance on Bitcoin.

Their analysts project that Bitcoin could reach $200,000 by 2025, $500,000 by 2029, and potentially exceed $1 million by 2033.

They attribute this optimistic outlook to Bitcoin’s unique supply and demand dynamics, particularly the four-year halving cycle.

As the German government continues its Bitcoin liquidation, the cryptocurrency market will be watching closely to see how this significant sell-off impacts prices and investor sentiment in the short and long term.

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