The recent development involving the US and German governments has put Bitcoin (BTC) and the broader crypto market at risk of a further downtrend. On-chain data suggests that both governments are looking to offload a substantial amount of their BTC holdings, which could exert more selling pressure on the flagship crypto.
The US government sent 3,940 BTC ($240 million) to Coinbase Prime, as revealed by on-chain analytics platform Arkham Intelligence. This raised fears that the government may be looking to offload these crypto tokens, which could contribute to the selling pressure on Bitcoin. This BTC was part of the seizure from narcotics trafficker Banmeet Singh, who sold drugs through the Silk Road marketplace. The US government has previously sold Silk Road BTC, with their last confirmed sale of 9,861 BTC ($216 million) in March. The sale of the recently transferred 3,940 BTC to Coinbase is yet to be confirmed.
Meanwhile, the German government also transferred BTC to crypto exchanges Kraken and Bitstamp, adding to the selling pressure in the market. They recently moved 125 BTC ($7.71 million) each to these exchanges, following a previous transfer of 400 BTC ($24 million) to Kraken and Coinbase. Additionally, the German government moved 1,000 BTC to an unknown address (139Po), which could be another crypto exchange.
The potential Bitcoin sale from the US and German governments comes at a time when Bitcoin is already facing significant selling pressure. BTC miners have sold 30,000 BTC ($2 billion) this month alone, contributing to the crypto’s decline since the beginning of the month.
In contrast to the US and German governments, El Salvador has chosen to accumulate Bitcoin holdings. Since adopting Bitcoin as a legal tender in September 2021, El Salvador has been purchasing 1 BTC every day through its ‘1 Bitcoin a day program’. Data from Arkham Intelligence shows that El Salvador currently holds 5,794 BTC ($351.82 million) and continues to accumulate through foreign investments and mining operations. The government plans to create a Bitcoin bank to attract foreign investors with frictionless Bitcoin investment.
As Bitcoin faces selling pressure from various sources, including governments and miners, the market remains volatile. The contrasting approaches of governments like the US, Germany, and El Salvador highlight the diverse strategies and attitudes towards Bitcoin and cryptocurrency. Traders and investors must stay informed and vigilant to navigate the ever-changing landscape of the crypto market.
