Germany has been busy in the past weeks shaking up the crypto market by selling large quantities of bitcoin that it was holding. This move has been hailed by incredulity and cautiousness on the part of investors, while German BTC advocates have heavily criticized it, stating that it is a counterproductive move on the part of the government, leaving the country financially vulnerable. The sale of the assets has also caused a relative dip in the trading price of bitcoin itself. However, whether that it directly correlated to the shift is unclear. In this article, we will

  • Take a more detailed look at why German officials have started to sell off massive amounts of Bitcoin in the past weeks and month
  • What the long-standing implications of this sell-off could spell for the country and why some political exponents are criticizing the move

Bitcoin sell-off began in Early June

The massive sell-off of crypto assets by the German government did not begin this week, but actually over a month ago towards the early days of June. How did this decision come about and why have officials continued to sell off Bitcoin since then?

  • The German Federal Criminal Police – or BKA – seized over 50,000 BTC from a now-defunct movie piracy website in February of this year, massively increasing the number of bitcoins that the German government and its affiliated bodies held at that time. At the time, the seizure was worth around $2.2 billion.
  • For weeks now, the German government has sold millions of dollars worth of bitcoin – from that massive haul and from previously held assets. Just last week, in fact, the government sold an additional 3000 bitcoins – worth around $172 million at the time of writing. The sale has continued into this week as well, with $155 million being sold on Monday alone.
  • The Eurozone’s biggest economy still holds roughly $1.3 billion worth of bitcoin as of today, according to Arkham Intelligence. However, the selling does not seem to be slowing down. But where exactly is this outflow of bitcoin going to? The answer is straightforward: these crypto reserves are going to exchanges like Coinbase, Kraken, and Bitstamp.

Reactions in Germany

Both German proponents of Bitcoin policies and global investors have voiced their concerns over these sales in the past weeks. This is due to the fact that these sales have indeed affected bitcoin prices to a certain extent, but also because proponents believe the sales are leaving Germany vulnerable on a financial level.

  • German lawmakers and BTC activist Joana Cotar was among the first and loudest to voice her dissent toward the government’s policy. As soon as the selling began in early June, Cotar immediately issued a statement urging the government to refrain from doing so.
  • The parliamentarian also indicated that, by refraining from selling these BTC reserves, Germany would effectively continue to diversify its treasury assests, a move that could also help the country assuade levels of inflation. In factr, Cotar described the move to sell-off the country’s BTC holdings as “not only not sensible, but counterproductive.” However, her dissent did next to nothing to dissuade the government from continuing on thier trajectory, as that very same day it sold another $172 million worth of the asset.
  • Outside observers have also voiced their concerns regarding the government’s policy. A Blockware Intelligence newsletter this past week called the policy a “strategic blunder”, claiming that selling bitcoin holdings for fiat currency is not a wise decision givent hey are able to print the latter. The same newsletter concluded that the government’s bitcoin-selling policy has put Germany at a geopolitical disadvantage. Whether this will end up being true or not, only time will tell.

Effects on the Crypto Market: What Next?

Since the middle of June, the German government has up to now liquidated over 10,000 BTC. Such an amount was undoubtedly going to have some sort of effect on the market as a whole, even though in overall terms it is much larger than that simple sum. However, it is the concentration of sales in such a short period of time that has investors worried.

  • This is especially true when we consider Bitcoin’s recent trend. In the last month, BTC’s spot price has fallen by 20%. The German government’s sales have – to some extent or another – put downward pressure on the cryptocurrency.
  • At the same time as the German government’s sales intensified, bitcoin suffered a relatively major price fall. On Monday, the price dipped below $54K, while it now trades just under $58K, having slightly recovered. According to CoinGecko, this was BTC’s lowest level since February of this year, in the past six months.
  • The sheer size of the ongoing German sale has led to an unexpected inflow of Bitcoin into the market, according to experts. This has certainly contributed to the fall of the asset’s price in the last couple of weeks – which has diminished by 15% since the start of June.
  • Nevertheless, Germany remains the fourth country in the world to hold the most Bitcoin. Only the United States, China, and the United Kingdom control more – even following the recent sales by the German government.

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