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Germany Depletes $3B Bitcoin Reserve- What’s Next?

Last Updated 5 days ago
Teuta Franjkovic
Last Updated 5 days ago
By Teuta Franjkovic
Verified by Insha Zia

Key Takeaways

  • The German government’s large Bitcoin sales have concluded, potentially boosting investor confidence and leading to forecasts of a Bitcoin price reversal.
  • Liquidation of recently recovered Bitcoin by Mt. Gox clients could introduce sell pressure.
  • Institutional buying pressure helps Bitcoin maintain its price above $60,000.
  • The market’s reaction to Germany’s selling may have been overblown.

July kicked off to a worrying start as the crypto market, especially Bitcoin, faced intense headwinds from Mt. Gox payouts and the German government’s alleged Bitcoin sales.

However, it seems that the German government has finally depleted its Bitcoin holdings, concluding weeks of significant sales that attracted widespread market attention.

German Government’s Bitcoin Fire Sale Ends, But Will Mt. Gox Spoil the Party?

According to blockchain analysis firm Arkham Intelligence, the government’s main Bitcoin wallet balance hit zero on July 12 after initiating sales estimated at over $2 billion through major exchanges like Coinbase Global Inc., Kraken, and Bitstamp.

However, it wasn’t long before the German Government’s Bitcoin wallet saw a remarkable 9000% increase in its balance. Various Bitcoiners donated a total of $171.92, boosting the wallet’s funds significantly from the previous day’s $1.87. As a result, the German government’s current Bitcoin holding remained at 0.005 BTC, valued at $320.

Germany BTC holdings
Credit: Arkham Intelligence

As market sentiment improves with the German government concluding its Bitcoin sales, crypto media may forecast a potential price reversal. However, attention is shifting to the looming sell-off from Mt. Gox clients, who could soon liquidate part of the 140,000 Bitcoin they recently reclaimed. The creeping sell pressure could maintain Bitcoin’s price within its current range or push it down to the M-top target of $44,000.

On the other hand, Bitcoin ETFs have seen unprecedented inflows, which have helped stabilize the market and boost investor confidence.

Specifically, during the week ending on July 8, these funds experienced inflows totaling $295 million, marking a reversal from previous trends of subdued investment. This surge in institutional buying indicates a strong belief in Bitcoin’s long-term value despite short-term market fluctuations.

According to Farside data :

  • BlackRock’s iShares Bitcoin Trust bought $120 million worth of Bitcoin
  • Fidelity Wise Origin Bitcoin Fund bought $115.1 billion worth of Bitcoin
  • Bitwise Bitcoin ETF bought $28.4 million worth of Bitcoin
  • Grayscale Bitcoin Trust bought $23 million worth of Bitcoin
BTC inflows
Credit: Farside Investors

Which Countries are the Biggest Bitcoin Holders?

According to Arkham Intelligence, the United States is currently the largest holder of Bitcoin among nations, with 213,297 BTC in its custody. Here are some of the countries that are the biggest Bitcoin holders (in no specific order):
  • Ukraine: Holds 46,351 BTC, largely from confiscating illegal assets, including a significant seizure from a former government official. This reflects Ukraine’s use of cryptocurrency in its anti-corruption efforts.
  • United States: Has accumulated about 213,297 BTC, worth approximately $13.8 billion, primarily through law enforcement seizures related to criminal activities.
  • China: Owns roughly 190,000 BTC, valued at around $12.621 billion, mainly acquired through seizing assets from the PlusToken Ponzi scheme.
  • El Salvador: Possesses 5,810 BTC, which has been actively acquired since September 2021, with a strategy that includes offering citizenship for Bitcoin donations.
  • United Kingdom: Estimated to hold over 61,245 million BTC, making it one of the top nation-state holders of Bitcoin, largely through successful seizures of illicit digital assets.
  • Germany: Controlled about 50,000 BTC seized in 2018 from a large-scale piracy website operation. Now, it only holds 0,005 BTC.
Countries BTC holders
Credit: Arkham Intelligence

Saxony Nears End of $3 Bn Bitcoin Sell-Off, Market Jitters May Subside

To July 11, Saxony has sold 3,448.25 BTC worth approximately $197.4 million and received back 500 BTC ($28.6 million).
This batch of transfers left Saxony with around 6,146 BTC ($350 million) from the original 50,000 BTC seized from Movie2K.
According to Arkham data,  Saxony’s Bitcoin wallet moved:
  • 500 BTC was to address “bc1qu,” which is a presumed OTC service institutional deposit address.
  • 748.251 BTC to Cumberland DRW ($42.78 million).
  • 400 BTC to Coinbase ($22.9 million).
  • 400 BTC to Kraken ($22.9 million).
  • 400 BTC to Bitstamp ($22.9 million).
  • 1,000 BTC to B2C2 Group ($57.3 million).

An hour later, Bitstamp returned 250 Bitcoins ($14.3 million) at 8:04 am UTC, followed by Kraken sending back another 250 Bitcoins ($14.3 million). Subsequently, hours later, the authorities sent 748.25 bitcoins ($42.8 million) to market maker Cumberland DRW.

There were already speculations that Germany’s Bitcoin selling spree could end soon, although the final tally could vary due to the state’s unusual practice of receiving portions of transferred assets, sometimes amounting to $10 million, back from exchanges and brokers before the day’s end.

The imminent completion of Germany’s $3 billion Bitcoin sell-off could ease market tensions, especially for investors who have been closely monitoring on-chain movements from larger wallets.

German Government Offloads Over $637M in Bitcoin to Exchanges

The German government continues to transfer heaps of Bitcoins to various centralized exchanges and trading entities, suggesting that it is gearing for a sell-off.

Here’s a quick rundown of all the transfers German authorities made on July 10, as identified by on-chain analytics firm Arkham .:

  • Over 1,127 Bitcoins ($66.2 million) were moved to an address associated with Flow Traders.
  • 500 Bitcoins ($29.4 million) were transferred to Coinbase.
  • 750 Bitcoins ($44.1 million) were sent to Kraken.
  • 536 Bitcoins ($31.5 million) were transferred to Cumberland DRW.
  • Approximately 2,250 Bitcoins ($132.2 million) were sent to an address likely linked to the B2C2 group.
  • 690 Bitcoins ($40.5 million) were transferred to an unidentified address.
Germany's BTC transfers
Credit: Arkham Intelligence

On July 11, German authorities made another series of similar transactions to similar addresses. They transferred 3,000 Bitcoins ($176.3 million) to Flow Traders, 1,000 Bitcoins ($58.8 million) to B2C2 Group, and 375 Bitcoins ($22 million) each to Kraken and Coinbase. It also sent another 250 Bitcoins ($14.7 million) to the previously mentioned unidentified address.

Over the past day, Germany has transferred over 10,853 Bitcoins worth approximately $637.7 million.

Bitcoin Holds Steady Above $55K Despite Massive Sell-Off

Bitcoin has demonstrated remarkable stability by maintaining its price above the key $55,000 support level despite intense selling pressure in the market over the past few days. At the time of writing, July 11, the price stood at $58,205. 

Institutional buying has partly offset pressure from the sell-off. Big players like BlackRock and Fidelity have been actively buying the dip. 

In a recent post, Arkham noted that while the German government has been offloading its Bitcoins, major institutional players like BlackRock have been buying. This was particularly evident on Wednesday when Bitcoin ETF issuers increased their total holdings by 4,862 BTC, valued at approximately $281 million.

BlackRock buying BTC from Coinbase
Credit: Arkham Intelligence/X

BlackRock notably expanded its holdings by 2095 Bitcoins ($121.16 million), bringing its assets under management (AUM) to 312,565 BTC valued at $18.08 billion. 

‘Governments Dumping Bitcoin’ Headlines Stir Market Panic, But Reality Suggests Overreaction

Headlines screaming ‘Governments dumping Bitcoin’ have recently spread like wildfire, even driving Bitcoin to levels not seen in months. However, beyond the sensational headlines lies a nuanced reality—one that challenges the initial panic and suggests the market’s reaction may be overblown.

Amidst the panic, it’s important to clarify that only Saxony, a relatively small state in Germany with a massive stash of Bitcoins, is conducting the sales.

Saxony’s decision to offload its bitcoins follows strict legal protocols set by the World Bank  for handling assets seized in criminal investigations, which mandates liquidation within a specific timeframe.

German Government Extends Bitcoin Sell-Off, Moving Millions to Unknown Address

The German government has extended its significant Bitcoin (BTC) transfers over the last week, continuing the trend that began last month. With 87,000 BTC on the move, fears of a massive sell-off loom, potentially triggering further market instability.

Bitcoin addresses linked to German authorities sent another 1700 BTC, worth $40.4 million, to the ‘139PoP’ address this weekend, as identified by the on-chain analytics firm Arkham .

Reports suggest that this transfer indicates a potential intention to sell the assets, as the unlabeled address may belong to an institution or an over-the-counter service provider. This is not the German government’s first interaction with the address; in the past three days, authorities have sent more than 1,200 BTC to this wallet.

The German government began transferring Bitcoin to crypto exchanges like Coinbase, Bitstamp, and Kraken last month after seizing 50,000 BTC from the film piracy site Movie2k earlier in the year. In addition to the earlier transaction, Blockchain analytics platform Lookonchain noted  that the German government moved an additional 1,000 BTC, 500 of which were to Coinbase and Bitstamp.

Lookonchain  also added that Germany has made a BTC transfer every day this month, reducing its holdings to 39,826 BTC, valued at around $2.3 billion.

Government Bitcoin Sell-Off: A Drop in the Ocean for Crypto Market?

Due to the enormous scale of the transactions, government sell-offs can be classified as whale movements. Many market participants argue that these actions have increased selling pressure and contributed to Bitcoin’s price decline. However, Ki Young Ju, founder and CEO of CryptoQuant, disagrees  with this perspective. According to him, reactions to sell-offs from wallets linked to governments are mostly overrated, based on the cumulative value of Bitcoin inflows over the past year.

Ki Young Ju noted  that Bitcoin has received inflows of over $224 billion since 2023, with only 4% linked to assets seized by governments. Additionally, data shows that government-seized BTC has contributed about $9 billion to the realized market cap since 2023.

Addresses linked to the US and German governments have collectively sent over $737 million worth of Bitcoin to Coinbase, Bitstamp, and Kraken in the past two weeks, contributing to selling pressure amid a month-long decline in Bitcoin’s price.

While headlines about “governments dumping Bitcoin” could spark fear, uncertainty, and doubt (FUD) in the crypto community, the sell-off wasn’t significant in the grand scheme.

BTC/USD chart
Credit: TradingView

Based on this realized market cap data, it is clear that government-owned Bitcoins have minimal influence and are insignificant compared to the overall market funds. Realized market cap offers a unique perspective on Bitcoin’s true valuation by considering the last price at which each BTC was moved.

BTC Price Rollercoaster – Sharp Rebound Catches Short Sellers Off-Guard

Even though Bitcoin’s price dropped below $53,500, the market quickly recovered, with the reigning crypto king passing the $57,000 mark on Monday, July 8. The rapid rebound, however, caught short sellers off guard, leading to a $171 million liquidation of their positions. This illustrates the unpredictable and volatile nature of the crypto market.

High liquidation volumes often act as a reset button for the market, calming investors’ nerves and allowing for stabilization after periods of significant turbulence. Despite the volatility, such events can pave the way for more stable growth in the future.

Currently, the coin might be on a recovery trajectory as it signals an impending rebound. Furthermore, market participants appear to be eagerly waiting to buy BTC at the current discounted prices.

At the time of writing, Bitcoin is trading at $57,225  and is beginning to recoup some of its seven-day losses. Recent corrections have caused the crypto to fall by the largest magnitude since the bull cycle began at the 2022 low. Bitcoin is not out of the woods yet; the bulls must push the price into the $60,000 territory before it can resume its upward trend.

German MP Joana Cotar Criticizes Bitcoin Sale, Advocates for Treating it as Strategic Reserve.

The ongoing selling activity has faced criticism from Joana Cotar, a member of Germany’s federal parliament, who stated  the government’s decision to sell seized Bitcoins was wrong and added that such actions increase market volatility and could negatively impact the cryptocurrency market in the long term. Cotar advocates treating Bitcoin as a national strategic reserve, especially since the assets were confiscated from the illegal website Movie2k.to, totaling about 50,000.

She insisted:

“I urge you to refrain from a hasty disposal of state-owned Bitcoin.”

Cotar sees Bitcoin as a means for Germany to diversify its treasury assets, serve as a hedge against inflation, and foster innovation. She views selling off Bitcoin as not only unwise but also counterproductive for the country. The parliament member invited Saxony’s Minister, President Michael Kretschmer, Finance Minister Christian Lindner, and Chancellor Olaf Scholz to the “Bitcoin Strategies for Nation States ” event scheduled for October, aiming to shift their perspectives on Bitcoin.

Cotar has been active in promoting legal security for individuals and companies involved in Bitcoin while also emphasizing the need to address potential risks, such as money laundering and tax evasion associated with its use, but without curtailing innovation.

To further bolster Bitcoin’s understanding and support within the German parliament, Cotar launched the “Bitcoin in the Bundestag” program , which aims to educate her colleagues about Bitcoin’s benefits to enable more informed policymaking. She emphasized promoting Bitcoin’s attributes of freedom, including privacy protection, security standards, and avoiding excessive regulation.

Focused primarily on Bitcoin over other cryptocurrencies, Cotar has called for establishing a formal Bundestag committee to acknowledge the technological distinctions between Bitcoin and other crypto assets.

Additionally, Cotar has been a vocal opponent of the European Central Bank’s digital currency initiatives, particularly the Digital Euro. She has questioned its necessity, and during a speech last year, while donning a Bitcoin shirt, she criticized the Digital Euro, stating: 

 “Nobody needs the digital euro. Except for the ECB and politicians who have something else in mind.”

Justin Sun Offers to Buy Remaining German Government Bitcoin Amidst Market Turmoil

In response to the German government’s Bitcoin sales, Tron founder Justin Sun announced his readiness to purchase the remaining BTC in an off-market transaction.

Sun stated on X: 

 “I am willing to negotiate with the German government to purchase all BTC off-market in order to minimize the impact on the market.”

It remains uncertain how serious Justin Sun is about his proposal to buy $2.3 billion worth of BTC, including whether any official channels have been approached for this transaction. Known for trying to position himself as a savior during turbulent times in the crypto market, Sun’s intentions are often viewed with skepticism.

According to blockchain analytics firm Arkham Intelligence, Sun’s linked crypto wallet  contains just over $1 billion, adding another layer of intrigue to his latest claim. Meanwhile, the Crypto Twitter community has strongly supported that law enforcement might consider more strategic methods for selling seized assets, regardless of Sun’s sincerity.

Sun’s offer to purchase the German government’s Bitcoin holdings represents a notable development within the cryptocurrency ecosystem. Should this transaction proceed, it could stabilize the market and signify a pivotal moment in the global perception and management of digital assets.

The outcome and potential impact of this proposal are still uncertain. It remains to be seen whether the German government will entertain Sun’s proposal and what the broader implications for Bitcoin might be.

Bitcoin Tumbles in Fear of German Sales, Market Wipes Millions

The cryptocurrency market has experienced considerable turmoil during the last few weeks, wiping out over $665 million in only one week—marking the second-largest liquidation event in Bitcoin’s history after FTX. The market flush comes as Bitcoin endures intense pressure from Mt. Gox payouts and the German government’s decision to offload the bitcoins it seized. According to data from Coinglass , 230,541 traders were liquidated over the past day, with centralized exchanges accounting for $665.8 million of these liquidations.

Bitcoin held the lion’s share of liquidation, draining over $222.1 million. Notably, of these Bitcoin liquidations, approximately $181.8 million were long positions, indicating a significant impact on traders betting on the cryptocurrency’s price increase. Alongside the liquidation spree, Bitcoin dipped to $54,000, continuing its unlucky streak.

Bitcoin’s price has been facing significant turbulence recently, falling 10% since hitting a weekly high of $63,663 on July 1. On July 4, it briefly dipped below $57,000 for the first time since the bull rally began in February. However, the price since recovered to over $58K on July 5.

The recent price drop is heavily influenced by fear induced by the German government, which has moved over 3,000 BTC to centralized exchanges such as Coinbase, Kraken, and Bitstamp over the past two weeks. On July 4, the government transferred 1,300 BTC, valued at approximately $75 million, to these exchanges. Soon after, the German government transferred an additional 1,700 BTC, valued at roughly $97 million, to another wallet address. Blockchain analytics firm Peckshield expressed  that a seismic shift looms on the horizon.

After experiencing one of the largest liquidation events in its history, only surpassed by the FTX collapse, market participants now fear that the May 2021 crypto collapse  could repeat itself. However, historical patterns indicate that a correction similar to the current one has occurred recently, suggesting that a market reversal could be imminent.

Andrew Kang, co-founder of Mechanism Capital, commented  that most market participants are overlooking the significance of a potential loss of a 4-month range on Bitcoin. He noted that the closest comparison could be made to May 2021, which also followed a parabolic rally of BTC and altcoins.

Germany Moves $175 M in BTC to Exchanges, Signaling Potential Sale

According to data from Arkham,  the German government has transferred another batch of Bitcoin to several addresses, potentially indicating plans to sell the assets.

Authorities moved 3,000 Bitcoin, valued at approximately $175 million, to multiple addresses on July 4, including those associated with crypto exchanges.

Of this amount, 1,700 BTC was sent to an unidentified address beginning with “139Po.” Additionally, 500 BTC was transferred to an address at Bitstamp, 400 BTC to a Coinbase address, and another 400 BTC to a Kraken address.

These transactions follow similar moves made over the past two weeks, suggesting that the German government may be preparing to liquidate its Bitcoin holdings.

On Tuesday, July 2, the German government sent about $17.6 million worth of Bitcoin to its exchange addresses. According to Arkham data, the government has transferred over $300 million worth of Bitcoin to identified exchange addresses and the unidentified “139Po” address to date. The German government currently holds 40,359 Bitcoin, valued at approximately $2.32 billion.

Bitcoin Transferred to Different Exchanges

Last month, the German government sent 282.74 BTC , equating to about $17.6 million, to three leading crypto exchanges: Coinbase, Bitstamp, and Kraken. This has led to speculations of a possible liquidation of these assets.

Arkham, the on-chain analytics firm that monitors Bitcoin movements from addresses associated with the German state, identified  these transactions. This round of activity is just one in a string of recent transfers by Germany’s government using Bitcoin.

The huge amount of Bitcoin was initially taken from Movie2k.to, a website involved in movie piracy.

In January, Germany carried out a huge operation that resulted in the seizure of 50,000 bitcoins from a piracy website. According to an official statement, this was the largest-ever Bitcoin seizure by German law enforcement.

Recent data from Arkham shows that on July 2 at around 8:20 am UTC, the German Federal Criminal Police Office (BKA) distributed Bitcoin across multiple exchanges. This includes sending 100 BTC ($6.2 million) to Coinbase, 150 BTC ($9.4 million) to Bitstamp, and 32.74 BTC (around $2 million) to Kraken.

Arkham Germany Bitcoin
Credit: Arkham Data

So far, the German government has transferred roughly $193m worth of confiscated Bitcoin to identified exchange addresses. Also, another $251m was sent to an address marked “139Po.”

These transactions followed earlier movements on July 1, where the government sent 200 BTC ($12.6 million) to Bitstamp, 100 BTC ($6.3 million) each to Coinbase and Kraken, and 1,100 BTC ($69.4 million) to the “139Po” address. This continued expropriation of seized assets underlines the magnitude of Germany’s handling of its extensive Bitcoin holdings.

German Federal Police Wallet Transfers 400 Bitcoin to Coinbase and Kraken

According to  Arkham Intelligence, on June 26, a wallet associated with the German Federal Criminal Police Office (BKA) transferred 400 Bitcoin (BTC), valued at around $24.34 million, to Coinbase and Kraken.

Additionally, another 500 BTC, worth approximately $30.4 million, was sent to an untagged address labeled “139Po.”

While the transfer of $24 million in Bitcoin by a German government-linked wallet to exchanges like Coinbase and Kraken could suggest an intent to sell, this seems to be a relatively small amount compared to the $40 billion+ daily Bitcoin trading volume.

Germany’s Bitcoin holdings are substantial, totaling 46,359 BTC worth approximately $2.8 billion. This places Germany among the top countries holding Bitcoin, following the US, China, and the UK.

These transactions followed a series of notable Bitcoin movements last week. On June 19, $130 million was sent to various exchanges, followed by $65 million on June 20.

German Government Receives Large Bitcoin Transfers

Addresses labeled by the German government also received substantial amounts back, including $20.1 million from Kraken and $5.5 million from wallets linked to Robinhood, Bitstamp, and Coinbase.

According to the on-chain crypto analytics firm Arkham, a wallet associated with the German government, transferred 6,500 BTC to various exchanges on June 19, worth $425 million at the time.
Arkham reported  that this wallet, which held nearly 50,000 BTC,  likely obtained these funds from the Movie2k pirated movie website, which was operational in 2013. The transactions to Kraken, Bitstamp, and Coinbase suggest that the origin and subsequent sale of Bitcoins are clearly linked to this seizure.
This theory, however, encounters challenges, particularly after the disclosure by MicroStrategy, a US-based business intelligence firm, on June 20. MicroStrategy purchased an additional 11,931 BTC for $786 million, effectively absorbing the selling pressure from a two-day $292 million net outflow from US spot Bitcoin exchange-traded funds.
MicroStrategy’s bold Bitcoin strategy has proven to be a major success, with its stock price increasing nearly tenfold since it began investing in the cryptocurrency. This success has attracted attention from Wall Street, with Bernstein initiating coverage  with a bullish outlook and a price target significantly higher than the current share price. Bernstein analysts see MicroStrategy’s approach as potentially transformative for corporate treasury management.

With no recent regulatory shifts or other events negatively affecting cryptocurrency investor sentiment, the focus should be on the traditional finance sector, specifically macroeconomic data. Even though there is a short-term correlation between the S&P 500 index and the crypto market, traders often retreat from risk-on assets during periods of economic uncertainty.

Bitcoin Price Slides Amid German Government Sales and Mt. Gox Repayment Fears

These transactions occur amid a downturn in Bitcoin’s market value, with the cryptocurrency trading just above $61,300  as of Tuesday morning. Bitcoin has seen an 11% drop over the past month and a decline of over 7% in the past week, based on Bitstamp data.

The possibility of increased selling pressure from the German government and the anticipated Mt. Gox repayments in July has raised concerns within the crypto community. Mt. Gox is preparing to release approximately $9 billion in Bitcoin and Bitcoin Cash (BCH) to around 127,000 creditors who have been waiting over a decade for their funds.

The cryptocurrency market has been volatile, with liquidations exceeding $300 million  this past Monday. Bitcoin was at the center of these tumultuous movements, accounting for about $150 million of the total liquidations. Ethereum (ETH) also faced substantial disruptions, with $66 million in liquidations.

The majority of the recent market movements have impacted long positions, resulting in forced closures and additional downward pressure on prices. Moreover, the possibility of further sales by the German government introduces additional uncertainty into the market, potentially influencing future price dynamics.

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