Ten questions and ten answers: How will the impact of the German government's market crash, the 'culprit of the plunge', evolve in the future?

16038.7 Bitcoins, with a total value of more than 900 million US dollars. This is the amount of BTC that the German government transferred to exchanges and market-making institutions within one day yesterday (part of which has been withdrawn).

Since it started selling BTC on June 19, the German government has continued to "sell" in the past 20 days. Yesterday was the peak of selling in days. The amount of selling in a single day exceeded the total of the previous 20 days, resulting in The market's rebound was forcibly interrupted.

As one of the two most clear negative news in the current market (the other is Mt. Gox starting currency-based repayment), many readers still don’t know enough about the ins and outs of the German government’s “smash”, making it impossible to accurately assess the situation. The potential impact of the event on the market. In order to eliminate these doubts, Odaily Planet Daily will combine market information and on-chain data to clarify this information in the form of questions and answers.

• Q1: Where does the German government’s Bitcoin come from?

A1: In January 2024, police in the eastern German state of Saxony announced the seizure of nearly 50,000 BTC, worth approximately $2.2 billion at the time. The Saxony State Police commented at the time: "This is the largest seizure of Bitcoins by law enforcement authorities in the Federal Republic of Germany to date."

These Bitcoins come from a pirated movie and TV website Movie2k.to that was active around 2013. After Movie2k.to was shut down, German law enforcement authorities, with the assistance of the FBI, confirmed that the operators behind the website were a Polish and a German. There was not much information about the details of the subsequent investigation, But There are reports that one of the suspects voluntarily handed over the BTC to German law enforcement authorities.

After the seizure, the German Federal Criminal Police Office transferred the Bitcoins to an address under its actual control.

• Q2: How many Bitcoins did the German government hold?

A2: Currently, the German government’s holdings that can be tracked through public information and on-chain analysis are only the above-mentioned funds seized from Movie2k.to, with an approximate amount of 50,000 BTC.

However, considering that the Saxony police once described the seizure as "the largest operation" rather than the "first operation", It cannot be ruled out that the German government has also obtained some Bitcoins through other operations before. .

So we conservatively judge that the German government held at least 50,000 BTC before the sell-off.

• Q3: When did the German government start selling? At what stage has the sale progressed?

A3: On June 19 this year, Arkham monitoring found that 6,500 BTC were transferred from addresses related to the German government, and 2,500 BTC were transferred to exchanges such as Kraken and Bitstamp through new addresses. The price of BTC on that day was approximately for $64,000.

Since then, German government-related addresses have continued to transfer out BTC almost every day, with amounts ranging from a few hundred to thousands. Yesterday, the German government's sell-off reached its peak. On-chain analyst Ember Monitor pointed out that the German government transferred a total of 16038.7 BTC (approximately US$915 million) to exchanges and market-making institutions yesterday.

However, early this morning, German government-related addresses successively recovered a total of 3,673 Bitcoins (worth over 200 million US dollars), of which 3,623 Bitcoins came from Coinbase, Kraken and Bitstamp, and 50 Bitcoins came from addresses starting with bc1qxw.

The Block Research Director Steven Zheng analyzed that the German government may have signed sales agreements with some exchanges, and these return transactions may be because the exchanges were unable to complete the sales within the target price range, so they returned the BTC. German government address.

As of the time of publication, The German government still holds approximately 27,500 BTC in addresses related to it, which means that the German government may have sold 23,500 BTC, and the sell-off is nearly halfway done.

• Q4: How to monitor subsequent trends?

A4: Arkham provides a German government address tracking interface and it is recommended to monitor through this tool. If you use other on-chain tools for detection, it is recommended to track the following address directly.

The main address of the position: bc1q0unygz3ddt8x0v33s6ztxkrnw0s0tl7zk4yxwd.

Common intermediary address when transferring out: bc1qq0l4jgg9rcm3puhhfwaz4c9t8hdee8hfz6738z.

• Q5: Will the sell-off continue?

A5: Let me talk about the conclusion first, there is a high probability that it will continue.

One potential variable here is German MP Joana Cotar. Joana has repeatedly called on the German government to stop selling and suggested that the government turn the remaining Bitcoins into "strategic reserve funds."

Joana mentioned that she had expressed her concerns to the Governor of Saxony, President Michael Kretschmer, Finance Minister Christian Lindner and Chancellor Olaf Scholz, and invited Officials attended the "National Bitcoin Strategy" lecture on October 17 to discuss how to use Bitcoin to improve the national economy.

Obviously, Judging from the current selling speed of the German government, the remaining BTC will not survive October 17th...

• Q6: How big is the actual impact of the selling?

A6: Bitcoin’s transaction volume in the past 24 hours was approximately $33.7 billion, according to CoinGecko data.

In terms of absolute amounts, the BTC sold by the German government does not account for a large proportion of the total market transactions - Calculated based on yesterday's peak data of approximately US$710 million (16039 - 3673 = 12366 BTC), accounting for The ratio is about 2.15%; assuming that all the remaining approximately 27,500 BTC (about 1.54 billion US dollars) are sold to the market, the ratio is "only" 4.7%.

• Q7: Why is the market reaction so big?

A7: Taken together, there are three major reasons.

First, the German government did not use the over-the-counter channels commonly used for large-scale transactions, but directly "smashed" it into the exchange. The surge in short-term selling pressure can easily break the buyer's liquidity in major exchanges. This in turn causes the market to fall rapidly in the short term.

Second, the German government’s continued selling can easily affect market sentiment, especially in the current pessimistic market environment.

Third, the German government’s completely transparent operating model also gave some short sellers the opportunity to take advantage of the situation, exacerbating market volatility.

• Q8: How do various organizations and leaders evaluate this matter?

A8: Regarding this matter, the most well-known public comment is undoubtedly Sun Yuchen’s previous public statement that he is “willing to acquire all BTC from the German government off-site.” However, there has been no progress in this matter for the time being. After Germany was defeated by Spain in the European Cup, he sarcastically said: "The reason why the German team lost may be because they sold too many Bitcoins."

Back to the topic, regarding the German government's selling behavior this time, Many institutions and big names have expressed their opinions.

Bitfinex stated in its latest report that the market has gradually realized that although the BTC transferred by the German government has a large nominal value, it accounts for a relatively small proportion of the total trading volume of BTC, which is a potential market bottom signal.

James Butterfill, head of research at CoinShares, said that although the sell-off was actually relatively small, it significantly affected market sentiment.

Analyst Alex Krüger measured the current market liquidity and the magnitude of the market decline caused by several previous large transfers of Bitcoin, and believed that in extreme cases, If both the German government and Mt. Gox choose to sell at once ( The latter (assuming a 30% sell-off) may cause BTC to fall rapidly by 10.5% in the short term, but the market can ultimately absorb these selling pressures.

• Q9: What are the BTC holdings of other governments?

A9: Arkham has also made a special tracking interface for the BTC situation of other governments. Excluding the German government, the total value of BTC holdings of various governments exceeds 15 billion US dollars. The

The US government has the largest share of BTC holdings, valued at approximately $12 billion , much of which stems from the 2013 Silk Road bust and subsequent investigations into darknet markets.

The UK government holds approximately $3.3 billion worth of BTC, and the country’s tax agency HM Revenue and Customs (HMRC) has previously auctioned seized cryptocurrencies.

El Salvador holds $314 million in Bitcoin treasury. The situation in El Salvador is different from other countries in that it represents a strategic investment rather than an asset seizure. The country became the first country to adopt Bitcoin as legal tender in 2021 and has since accumulated through direct purchases and mining operations. More BTC.

• Q10: What are the selling trends of other governments?

A10: In addition to the German government, what needs to be paid attention to now is the potential sales trend of the US government.

Casa co-founder Jameson Lopp counted the U.S. government’s BTC dumping record late last month — Since 2014, the U.S. government has seized and sold at least 195,091 Bitcoins, making more than $366 million in profits.

Recently, US government-related addresses have also transferred BTC several times - including transferring 4,000 BTC to Coinbase on June 27th; transferring 11.84 BTC to an address starting with 3KHnT on June 28th, and transferring 11.84 BTC to an address starting with bc1qvc on July 4th The address transferred 237 BTC.

Unlike the German government, In addition to BTC, the US government also holds ETH (about 50,000 pieces), BNB (about 40,000 pieces), UNI (about 300,000 pieces) and other assets, and had On the 1st of the month, approximately 3375 ETH were transferred to the address starting with 0x5ac4. For users with positions in the above-mentioned currencies, perhaps they should pay more attention to the address trends of the US government.

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