According to public sources, a large number of the bitcoins sold by the German government have appeared as a result of confiscation. In early 2024, German law enforcement authorities seized 50,000 bitcoins associated with the activities of a piracy website that violated copyright law in 2013. This made Germany one of the largest government holders of bitcoin. Many states obtain bitcoins through confiscation from criminals, rather than through buying on the open market. Currently, the German authorities have 22,846 BTC in their account.
How this affects the BTC price
Selling a large number of bitcoins could potentially impact the price of the cryptocurrency. When a sizeable amount of bitcoins is released into the market, it can lead to an increase in supply and, as a result, a decrease in price, especially if BTC is dumped during a downtrend.
However, the extent of this influence depends on multiple factors:
- Sales volume relative to total trading volume
- The speed at which sales occur
- Overall market environment
- Reactions of other market participants
In this case, the German government appears to be spreading out sales over time and using different exchanges and intermediaries, which may mitigate the impact on the market.
That said, the very fact that a large holder (in this case, the state) is selling significant volumes of bitcoins can impact the sentiment of market participants and, accordingly, the price of the cryptocurrency.