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Bitcoin's recent price drop below $55,000 has sparked concerns of a potential decline to $50,000. Analysts from 10x Research attribute this to a shift in market sentiment and increased selling pressure, including from long-term holders taking profits. Additionally, large Bitcoin transfers by the German government and the upcoming repayments by Mt. Gox are also expected to impact the market. German lawmaker Joana Cotar urged the government to reconsider its Bitcoin sales. Meanwhile, Tron founder Justin Sun shared on X that he is interested in buying Germany's Bitcoin holdings to mitigate the price impact on BTC.
Bitcoin On Its Way to $50K
Bitcoin (BTC) recently experienced a big decline, dropping below $55,000 from over $60,000 on July 4. Now, experts at 10x Research believe this could signal a potential deeper fall to $50,000.
This shift in market sentiment is attributed to a reduction in buy flows and an increase in sell flows. Markus Thielen, an analyst at 10x Research, pointed out that early June data already suggested the market was overbought and ripe for correction.
BTC Double top formation (Source: 10x Research)
The sharp 6.65%% drop in BTC's price has affected investor sentiment and market liquidity, which is evident in BTC's $1.08 billion market capitalization and a 36% rise in trading volume. The 10x Research report also warned that the price decline could accelerate as support levels are breached and sellers seek liquidity. This sell-off is also happening as Mt. Gox is preparing for repayments of $8.5 billion worth of BTC that are scheduled to begin in July.
According to the 10x Research report, having broken the $60,000 support, “only ill-informed traders are willing to buy here.’ This is why the report now advises traders to focus more on risk management due to ongoing volatility.
Additionally, a recent analysis by IT Tech indicates that the downward trend is driven by long-term holders taking profits. On July 3, the spent output profit ratio (SOPR) for long-term holders exceeded a value of 10, showing that BTC was sold for at least 10 times the initial purchase price. This means that long-term holders have contributed a lot to the selling pressure in the market at the moment.
German Government Transfers 3,000 BTC
Not helping Bitcoin’s situation at all is the fact that a crypto wallet linked to the German government recently transferred more than 3,000 BTC, valued at close to $172 million, to various crypto exchanges and a separate wallet. On July 4, blockchain investigator PeckShieldAlert pointed out the transfer of 1,300 Bitcoin, worth $75 million, from a wallet labeled “German Government (BKA).” The Bitcoin was distributed across three major crypto exchanges: Coinbase, Kraken, and Bitstamp.
The same wallet also transferred an additional 1,700 BTC to another wallet address. PeckShield confirmed that the total transfer from the German government wallet amounted to 3,000 BTC, with 1,300 BTC going to centralized exchanges and 1,700 BTC to a separate wallet, which was corroborated by on-chain analytics platform Arkham Intelligence.
The German government has been actively transferring over 3,000 BTC to multiple exchanges over the past two weeks. This activity, along with large Bitcoin transfers from the United States government and the upcoming Mt. Gox repayments are expected to increase selling pressure on Bitcoin even more.
Since February 2024, the German government-labeled wallet, which initially held 50,000 BTC, has been transferring a very big portion of its holdings. Governments worldwide, including Germany, have confiscated Bitcoin and other digital assets linked to criminal activities and periodically auction these assets.
In the United States, Bitcoin associated with the dark web marketplace Silk Road has been sold. American businessman and Bitcoin advocate Tim Draper ended up buying 29,656 BTC from the Silk Road haul in a 2014 auction organized by U.S. marshals.
Lawmaker Urges Germany to Stop BTC Sales
Meanwhile, German lawmaker and Bitcoin activist Joana Cotar has urged the government to stop its rapid Bitcoin selling spree and consider adopting it as a strategic reserve currency to mitigate risks in the traditional financial system. In a letter to Germany's government on July 4, Cotar laid out the potential benefits of Bitcoin, including diversification of treasury assets, hedging against inflation and currency devaluation, and fostering innovation.
Cotar argued that further sell-offs are not sensible and are counterproductive for the country. She invited four German politicians to the "Bitcoin Strategies for Nation States" event in October to talk about some of these ideas in detail.
Since June 19, the German government has sold 7,583 Bitcoin, valued at $434.9 million, according to Arkham Intelligence. Germany's Bitcoin holdings now stand at 42,274 BTC, which is worth $2.4 billion.
Cotar believes that Bitcoin could improve Germany's economic independence and resilience to external financial uncertainties. She also recommended developing a comprehensive Bitcoin strategy, which could include keeping Bitcoin in the state treasury, issuing Bitcoin bonds, and creating a supportive regulatory environment. This strategy would also involve establishing a legal framework to promote Bitcoin-based innovation and attract top talent globally.
The German government has not confirmed whether it plans to sell the remaining Bitcoin holdings.
Justin Sun Offers to Buy Germany's Bitcoin
If Germany does decide to sell its BTC, they already have a very interested buyer. Tron founder Justin Sun publicly offered to buy the German government’s Bitcoin holdings to mitigate any negative price impact from selling. Sun shared that he is willing to negotiate an off-market purchase of Bitcoin in a July 4 post to his 3.5 million followers on X.
The German government-labeled wallet first raised suspicions on Jun. 19 with a transfer of 6,500 BTC, sparking concerns among traders about further sales affecting Bitcoin’s price. Before the transfer, the wallet held almost 50,000 BTC since February 2024, believed to have been seized from the pirate movie website operator Movie2k. The wallet was tagged by Arkham Intelligence as belonging to the German Federal Criminal Police Office (BKA), which seized 50,000 BTC in Dresden in January.
While the specific authority responsible for selling the BTC is still unclear, BKA spokeswoman Kristina Sawazki confirmed that the BKA does not hold the seized Bitcoin. The sale or conversion of seized Bitcoins into Euros is managed by the relevant public prosecutor’s office or court, with proceeds going to the Land Revenue Office as per Article 60 of the Code of Criminal Procedure. The BKA only preserves seized or confiscated crypto-assets during investigations for public prosecutor’s offices.
Mt. Gox Moves Bitcoin to New Wallet
The collapsed Japanese crypto exchange Mt. Gox has transferred 47,229 Bitcoin, worth $2.71 billion, to a new wallet address in its first major transaction since May. According to Arkham Intelligence, the transfer happened on July 5 at 12:30 a.m. UTC from “cold storage.”
This movement is part of the exchange’s scheduled plan to begin repaying creditors this month, with a total of $8.5 billion worth of Bitcoin set for repayment. Mt. Gox informed creditors that all necessary steps to start issuing repayments in July had been completed, according to a June 24 statement from Mt. Gox trustee Nobuaki Kobayashi.
However some market commentators are very concerned about the potential market impact of creditors selling their holdings, which have been inaccessible for over ten years. On the other hand, some analysts have tried to calm these fears, suggesting the actual amount of Bitcoin likely to be sold is closer to $4.5 billion.
Alex Thorn, head of research at Galaxy Digital, believes that many Mt. Gox Bitcoin holders might actually hold onto their assets longer than expected because of the potential adverse capital gains tax impact of selling all of their BTC at once.
In a previous transaction that took place on May 28, Mt. Gox transferred almost $7.3 billion worth of BTC to an unknown wallet address. This caused Bitcoin's price to dip by as much as 2%.
