Germany transfers $400 million worth of Bitcoin. Will Bitcoin usher in a new round of reorganization?

Wallet transfers spark speculation

Germany’s Federal Criminal Police (BKA) has moved more than 6,500 Bitcoin (about $425 million) from a single wallet, sparking concerns about a possible sell-off. Blockchain analytics platform Arkham Intelligence found that the wallet, which held 50,000 Bitcoin, belonged to the BKA and was linked to funds seized from the operators of Movies2k.to. Despite such a large move, the price of Bitcoin rose slightly by 0.2%.

Transaction details emerge

The transferred Bitcoin went into a new wallet “bc1q0uny,” which then moved the funds in four separate 500 BTC transactions. Two transactions were sent to Bitstamp and Kraken, while the remaining funds were transferred to unidentified wallets. The activity led to speculation in the crypto community that the BKA may be planning to sell some of its assets. Typically, the transfer of large amounts of cryptocurrency from cold wallets to exchanges indicates an intent to sell, especially after a long period of inactivity. The BKA wallet has been idle since mid-January, when Movie2k.to made a large transfer to the operator.

After the recent transactions, the BKA wallet now holds 43,359 BTC, worth $2.83 billion, and has received 2,500 BTC worth $163.29 million. The “bc1q0uny” address is now empty, seemingly part of a strategy to obfuscate the true intent of these actions.

Bitcoin movement by German exchange wallet (Source: Arkham Intelligence)

Generally speaking, moving cryptocurrencies from cold wallets to exchanges implies the intention to sell, especially after a long period of dormancy.

If the transferred Bitcoins are sold, it will cause market shocks

When a large amount of Bitcoin is sold off, the supply suddenly increases, and if there are not enough buyers to absorb these sell orders, the price will fall. This is a direct application of the supply and demand principle.

A massive Bitcoin sell-off will trigger panic in the market. Many investors are worried that prices will continue to fall, so they follow the trend and sell. This panic selling makes market prices fluctuate violently. This may also cause increased server load on the exchange and may even cause temporary technical issues.

The volatility of the Bitcoin market increased significantly during this event. High-frequency traders and day traders have flooded the market in an attempt to profit from wild price swings.

Large-scale selling may trigger stop-loss orders or liquidation orders in the market (such as forced liquidation in margin trading). The triggering of these automatic sell orders can further exacerbate the price decline. Some large investors may take advantage of this opportunity to make a profit by suppressing the price and buying at a lower level.

Overall, the massive Bitcoin sell-off had multiple impacts on the market, including price drops, swings in sentiment, surges in trading volume, increased volatility, the potential for market manipulation, and the triggering of technical sell orders. These factors combined to cause the Bitcoin market to experience severe turbulence in a short period of time.

At the time of writing, Bitcoin is trading at $65,160. Although it has risen slightly by 0.22% in one day, it has continued to fall over the past few days and has fallen by 4.6% in the past week.

Global Government Bitcoin Holdings

Germany is not the only country to hold a large amount of Bitcoin reserves. The United States is the largest government holder of Bitcoin, with 213,246 BTC worth nearly $14 billion, mainly from seizures. China and the United Kingdom follow closely behind, holding 190,000 BTC and 61,000 BTC respectively. El Salvador has invested its reserves in purchasing Bitcoin and holds about 600 BTC, worth $400 million. In total, countries around the world hold about 567,315.75 Bitcoins, which accounts for about 3% of the total supply.

Table showing countries and their Bitcoin holdings (Source: Bitcoin Treasuries)

The movement of 6,500 Bitcoins in Germany sparked rumors of a sell-off, causing market concerns despite a slight price increase. The BKA’s actions highlight the significant impact that government-held cryptocurrencies can have on market dynamics.