Markets
Cryptocurrency market jitters eased as Germany completes bitcoin liquidation
On Friday afternoon, the German government’s efforts to empty its bitcoin wallets of billions of dollars in assets seized from criminals came to an end, with the wallets now containing zero digital assets, according to new data from blockchain analytics firm Arkham Intelligence.
Last month, wallet transfers sparked intense fears in the cryptocurrency community that the price of bitcoin, the world’s largest cryptocurrency, would fall as a result of the German government’s massive liquidation.
Instead, the price of bitcoin went up 3%. At the time of writing, the price of bitcoin is valued at over $58,000, which represents a 1% jump in the last 24 hours.
As of June, the German government’s bitcoin wallets contained nearly $3.4 billion worth of bitcoin, but Berlin has been working aggressively to liquidate its seized assets. Earlier this month, Germany’s Federal Criminal Police Office, known as the Bundeskriminalamt (BKA), unloaded $2.8 billion worth of bitcoin, or 50,000 bitcoin.
The government has transferred funds to major cryptocurrency exchanges in the US and Europe, such as Coinbase, Bitstamp and Kraken.
Market observers of the German government liquidation closely monitored transfers from the bitcoin wallet and noticed that some of the government transfers were returned to German government wallet addresses, indicating that the BKA was simply gauging liquidity before selling assets.
On Thursday, the crypto Fear and Greed Index dropped to “extreme fear” over the German government’s transfers, but that nervousness was quickly alleviated once the liquidations were complete. In fact, some analysis suggests that heightened investor anxiety can present prime opportunities to buy bitcoin.
“One of the best metrics for identifying ideal entry points into a bull market is when short-term bitcoin holders sell at a loss and the fear index is ridiculously high (which has been the case for the past few weeks),” observed an analyst at CryptoQuant. “In contrast, previous market tops were signaled by long-term holders taking significant profits over several months, which has not yet happened.”