Why The US And German Government Selling Bitcoin Isn’t A Big Deal

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As a researcher with experience in the cryptocurrency market, I believe that while selloffs by governments, such as the recent one by Germany, can contribute to selling pressure and price declines in Bitcoin, their impact should not be overestimated. Based on data from CryptoQuant, the cumulative value of Bitcoin inflows since 2023 is $224 billion, with only 4% of this being linked to assets seized by governments.

Since June, the Bitcoin market has experienced numerous significant sell-offs by large investors, commonly referred to as “whales.” The primary sources of these sell-offs have been miners and a select group of other whales. However, recent reports indicate that the German government is also unloading some of its Bitcoins from its reserves.

Because of the massive size of the government’s sales, these actions can be equated to the large-scale movements of “whales” in Bitcoin markets. Numerous market players may claim that their selling activities have intensified the selling pressure and resulted in a drop in Bitcoin’s price.

Ki Young Ju, the founder and CEO of CryptoQuant, holds a contrasting perspective. He’s not convinced by the notion that selloffs from government-linked wallets significantly impact Bitcoin’s price. Instead, his belief stems from an analysis of Bitcoin inflows over the past year.

Government Selling Bitcoin Is Overrated

Over the past two weeks, Bitcoin addresses associated with the US and German governments have collectively transferred approximately $737 million to cryptocurrency exchanges Coinbase, Bitstamp, and Kraken. These transactions likely represent sell orders being placed on these platforms.

Notably, these bitcoin transfers took place during a slump in its price lasting over a month, intensifying the downward trend.

Despite headlines causing alarm about “governments selling off Bitcoin,” the situation may not be as drastic as it seems. True, some governments have indeed disposed of a part of their Bitcoin holdings, but the scale of these sales pales in comparison to the overall market size.

Why The US And German Government Selling Bitcoin Isn’t A Big Deal

As a crypto investor following the insights from CryptoQuant’s Ki Young Ju, I’ve learned that approximately $224 billion in Bitcoin inflows have entered the market since 2023. Notably, just 4% of this amount, equating to around $9 billion, can be traced back to Bitcoin seized by governments during this period.

Govt #Bitcoin selling is overestimated.
Approximately $224 billion has entered this market since 2023. The government-seized bitcoins account for roughly $9 billion in the total realized value.
Four percent represents the amount that has been achieved so far towards the total accumulated value since 2023. Don’t let fear, uncertainty, and doubt (FUD) surrounding government sales negatively impact your trading decisions.
— Ki Young Ju (@ki_young_ju) July 5, 2024

As a crypto investor, I’ve come to understand that the realized market cap of Bitcoin provides valuable insights into the true power and significance of government-owned Bitcoins. Compared to the vast pools of funds circulating in the market, these coins hold minimal sway. Realized market cap is an essential metric that offers a more accurate reflection of Bitcoin’s worth by considering the last transaction price for each coin. This perspective sheds light on the actual fiat currency that has been pumped into the cryptocurrency, providing us with a clearer picture of its true value.

Current State Of Bitcoin

Currently, Bitcoin is priced at $57,360 during this update. It’s making some progress in regaining a portion of its weekly losses. The latest market corrections have led to Bitcoin experiencing its most significant decline since the bullish phase started at the 2022 low price. However, Bitcoin still hasn’t fully recovered and needs the bulls to drive the price above $60,000 before it can continue climbing.

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2024-07-07 16:11