The recent announcement from Arkham Intelligence indicating that Germany’s on-chain Bitcoin wallet balance has reached zero is extremely significant. This news suggests that the sell pressure from Germany, a major player in the European economy, is likely coming to an end. The latest outflows from the wallet mark the conclusion of a bearish trend that has been looming over the crypto market for several weeks. It is a relief to see this development, especially at a time when on-chain indicators are hinting at a potential local bottom in the near future.
As of late Thursday, the government was left with only 4925 BTC ($282.45 million) in its wallets, a dramatic decrease from the 50,000 BTC it owned as recently as June 19. These coins were officially seized from the movie piracy website Movie2k back in January. Following this, the government received back 4169 BTC from various exchanges like Kraken, Coinbase, and Bitstamp. However, by early Friday morning, they had sent back 2700 BTC to these platforms. Subsequently, by 10 AM, another 2300 BTC were sent to Kraken, an unidentified address, and a possible institutional deposit/over-the-counter trading service. Finally, around 2:35 PM, the remaining 3846.05 BTC ($223.81M) were sent to the institutional trading desk and Flow Traders, a proprietary trading firm.
Germany’s decision to start selling its Bitcoin holdings coincided with the U.S. government also liquidating some of its seized coins. This, along with concerns regarding repayments to creditors of the bankrupt Mt. Gox Bitcoin exchange, created a sense of unease in the market. The lack of demand from Bitcoin whales, coupled with a shortage of stablecoin liquidity, contributed to a drop in Bitcoin’s price to $53,900 last Friday, marking a considerable pullback from its high of $73,700 in March.
Investors in the Bitcoin space have expressed mixed reactions to Germany’s selloff. While some are celebrating the completion of the sell-off, others are critical of the government for exchanging their coins for fiat currency. Reflexivity Research co-founder Will Clemente tweeted on Friday, suggesting that Germany’s decision to dump their seized BTC may be viewed as a significant strategic error in the coming decades. MicroStrategy’s executive chairman Michael Saylor also chimed in, implying that selling Bitcoin is not a prudent move.
Now that the selloff is completed, on-chain analysts believe that Bitcoin’s price is at a favorable level for new investors to enter the market. Institutional investors have been accumulating BTC at a rapid pace this week, signaling their confidence in the long-term prospects of the cryptocurrency. Additionally, the fact that short-term holders are selling at a loss indicates that market fear has reached its peak and a price correction may be on the horizon.
Germany’s decision to empty its on-chain Bitcoin wallet has significant implications for the market. While it may have created short-term fluctuations, it has also opened up opportunities for new investors to enter the space. The crypto community will be keenly watching how this development plays out in the coming weeks and months.
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