On Tuesday, the sentiment surrounding the cryptocurrency market improved when multiple exchanges returned assets valued at over $200 million to a German government agency.
Bitcoin was trading slightly over $57,300 in the morning hours of Asia, which represents a 3.5% gain over the previous day.
Other significant tokens saw increases as well; Ether (ETH) returned above $3000 and Solana’s SOL increased by up to 6%. Dogecoin (DOGE) experienced a nearly 7% increase.
Monday’s market tremors were caused by Bitcoin’s brief dip to $55,000 following the transfer of over $900 million to multiple addresses from an address connected to the German Federal Criminal Police Office (BKA).
The abrupt movement alarmed the traders. Subsequently, it was disclosed that the BKA had been reimbursed more than $200 million by exchanges like Kraken, Coinbase, and Bitstamp in the previous twelve hours.
Data from Arkham indicates that while the assets were sent to these exchanges, they did not hit the market.
German Government’s Bitcoin Stash
A sizeable Bitcoin hoard valued at almost $3 billion was seized by the German authorities from the Movie2k.to movie piracy website.
The site had 50,000 Bitcoin taken from it by German police in January, making it the biggest Bitcoin seizure made by German law enforcement to that point.
Starting in mid-June, the government had been gradually liquidating over 10,000 BTC, which put downward pressure on the cryptocurrency’s market rate.
In order to guard against risks in the established financial system, German lawmaker and Bitcoin activist Joana Cotar urged the government to stop its “hurried” selling of Bitcoin and instead use it as a “strategic reserve currency” last week.
Cotar underlined that Bitcoin could protect Germany from inflation and currency depreciation, diversify its treasury holdings, and promote innovation in the nation.
She maintained that more sell-offs would not benefit Germany and would actually be counterproductive.
As Cotar noted, other governments—the US included—are either holding or are considering using Bitcoin as a reserve currency.
In addition, she invited four politicians from Germany to the October 2024 “Bitcoin Strategies for Nation States” event.
German Sell-Off Impacts Bitcoin
Research analyst at Fineqia International Matteo Greco recently noted how Mt. Gox and miners’ selling pressure contributed to the decline in Bitcoin’s price.
He mentioned that the closing price of Bitcoin for the week was approximately $55,850, which was 11% less than the previous week’s closing price.
Strong selling pressure was visible throughout the week, as Bitcoin briefly dropped to $53,500 before rising.
Greco claims that the high on-chain selling pressure was caused by the beginning of Mt. Gox repayments as well as continued selling pressure from miners after the recent halving.
As previously reported, as their profits decline in the wake of the recent sell-off in the Bitcoin market, Bitcoin miners are entering a crucial stage known as “capitulation.”
In order to maintain operations, generate revenue, or manage their exposure to Bitcoin, miners may choose to scale back operations or sell a portion of their reserves and mined Bitcoin. This is known as miner capitulation.