Recently, Germany’s on-chain Bitcoin wallet balance reached zero, signaling that the sell pressure from the European economic powerhouse may be coming to an end. This news comes after weeks of bearish sentiment hanging over the crypto market, at a time when on-chain indicators are pointing towards a local bottom being near.
The Government’s Wallet Activity
As of late Thursday, the state was reported to have just 4925 BTC ($282.45 million) left in its wallets, a significant decrease from the 50,000 BTC it held as recently as June 19. The government had seized these coins from the movie piracy website Movie2k back in January. Early on Friday, the government received 4169 BTC back from exchanges like Kraken, Coinbase, and Bitstamp before sending 2700 BTC back to these platforms by 5:00 am ET. Later in the day, another 2300 BTC were sent to Kraken, an unidentified address, and a likely institutional deposit/over-the-counter trading service. Finally, by 2:35 pm, the government sent its remaining 3846.05 BTC ($223.81M) to the institutional trading desk and Flow Traders—a proprietary trading firm.
Germany’s decision to sell off its seized BTC comes at a time when the U.S. government is also selling some of its seized coins from criminals. Market sentiment regarding the repayments to creditors of the bankrupt Mt. Gox Bitcoin exchange has led to fears as well. This, coupled with minimal demand growth from large Bitcoin holders and a lack of stablecoin liquidity, contributed to Bitcoin’s price falling to $53,900 last Friday, representing a significant drop from its March high of $73,700.
Online Bitcoin investors have reacted to Germany’s selloff with mixed feelings. While some are celebrating the completion of the sell-off, others are criticizing the government for converting their coins to fiat currency. Reflexivity Research co-founder Will Clemente called Germany’s action “one of the biggest strategic blunders in history,” and MicroStrategy’s executive chairman Michael Saylor indirectly criticized the government’s decision in a tweet.
With the completion of the selloff, on-chain analysts believe that Bitcoin’s price is now at a healthy entry point for new investors. Institutional investors have been accumulating BTC at their fastest rate since March, indicating that they see this as an opportunity to “buy the dip.” Additionally, short-term holders have been selling their coins at a loss, which analysts interpret as a sign that market fear has peaked, and a correction in price is imminent.
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