Published: July 3rd, 2024
A report from crypto data firm Arkham Intelligence says the US and German governments are moving big sums of Bitcoin, apparently impacting BTC’s recent price slide. The questions crypto traders are asking is, what happens next?
On Monday 1st July 2024, Arkham says wallets associated with the German government moved 1,500 BTC worth close to USD 94.93 million BTC to a number of different locations. The lion’s share landed at major crypto exchanges, with 200 BTC going to a Bitstamp account and 100 BTC going to Coinbase. A further 100 BTC went to a wallet at the Kraken exchange.
The remaining 1,100 Bitcoin was sent to two unidentified wallets, with 500 BTC going to one, and 600 BTC to the other.
The US government also shifted a large amount of crypto on Monday. Wallets associated with Washington moved 3,375 ETH worth USD 11.75 million to an unidentified address.
Monday’s moves were just the latest by the German government, which has conducted a number of token transfers over the past three weeks. Berlin is one of the largest government crypto holders in the world, with an estimated USD 2.8 billion in BTC, most of it seized in legal actions. The US government is the largest state holder of crypto in the world
In June 2024, Germany began liquidating its BTC holdings by selling off more than USD 195 million in Bitcoin in one 24-hour period. The resulting sell pressure dragged BTC’s price down about 3.5 per cent, according to Arkham.
BTC’s price remained stable in the immediate aftermath of the moves, even rising by two per cent to USD 62,920.
Crypto whales, whether private or public sector, have the power to move markets. In February 2021, a report from on-chain analytics firm Sentiment said that Bitcoin whales with more than 1,000 Bitcoins each had enough market influence to spark a rally. The analysis suggested that the last time these whales held more than 43% of the Bitcoin available in supply, the currency attained a 54-week high, rapidly depreciating soon after they dumped their holdings to below 42%.
Bitcoin whales with more than 1,000 coins controlled more than 42.5% of the virtual currency's existing supply at that time, giving them the power to influence the next rally, especially if they take it past 43%.
The last time whales held a similar proportion of coins in supply, BTC shot up to a 54-week high. Sentiment analysts said they may even have fueled the cryptocurrency's rally to its then all-time high of USD 58,352.
These figures matter because the whales shored up the supply about two weeks before the coin rallied to its all-time high. A decrease in the supply that the whales had preceded the drop in the virtual currency's price.
The data show that if the whales were to gather more than 43% of the available supply once again, they are probably looking to inspire another rally. Analysts said that the number of holders decreased just before the coin hit its record high and during the price correction.
Later in early March 2021, analyst predictions came true when BTC flirted with the USD 54,000 level. The globe's biggest cryptocurrency hit a two-week high in the process, while its market capitalization shot past USD 1 trillion, only the second time it had reached that level.
Bitcoin then extended its gains, hitting a 24-hour high of USD 54,348.57, a seven per cent increase over the previous day. Analysts attributed the current crypto market status to several factors, including inflow of substantial capital from institutional investors and mainstream corporations' purchases. Square, Tesla, and MicroStrategy are a few of the companies that have poured billions of dollars into the cryptocurrency environment by buying Bitcoin.
In mid-March, Chinese app maker Meitu announced that it had purchased USD 22 million worth of Bitcoin and almost USD 18 million in Ether. Overall, the company had invested USD 40 million in crypto.
The price of Ether also saw a rise, moving up to USD 1,836.73, up close to seven per cent compared to the previous day, according to data from CoinDesk.
In November 2023, data from CoinShares said inflows to crypto exchange-traded products (ETPs) amounted to USD 346 million in one week. That’s the highest they had been over 9 consecutive weeks, bringing year-to-date deposits to USD 1.5 billion.
Deposits into Bitcoin-specific funds came to USD 311 million, or roughly 90 per cent of the cash committed by institutional investors. Because of those inflows and BTC's rising price, the total value of crypto fund assets under management now amounts to USD 45 billion.
Exchange-traded products are investment instruments that have shares listed on an exchange. They rise and fall in value based on the performance of an underlying asset, in this case a cryptocurrency like Bitcoin or Ethereum. They can also be benchmarked against traditional assets like stocks, bonds, commodities or currencies. Their significance in crypto circles is to give traditional investors exposure to crypto markets without the volatility risk entailed by owning a cryptocurrency directly.
Before its about-face earlier this year, the US Securities and Exchange Commission (SEC) had staunchly resisted approving a spot Bitcoin ETF because regulators believe there’s too much risk of manipulation in crypto markets.
It’s worth noting that a false report about BlackRock’s Bitcoin ETF application being approved sent Bitcoin 10 per cent higher in one brief October 2023 spike. An imposter used Blackrock’s name to register a bogus XRP Trust using the company’s iShares brand. The price of XRP surged on the news and then quickly returned to Earth when BlackRock announced it was a fake.
CoinShares itself had skin in the Bitcoin ETF approval game, revealing that it had secured an option to buy American digital asset manager Valkyrie's ETF business.
