Germany Sells 3,500 Bitcoins Worth $200 Million, Will the Bulls Bleed?

Optimism around Bitcoin [BTC] surged in recent days as prices reclaimed the $59,000 level. However, recent moves made by the German government

Bitcoin [BTC] price movements have been closely followed over the last few days as prices optimistically surged to reclaim the $59,000 level. However, recent activity in the German government’s cryptocurrency wallet might leave a sour taste in the mouths of BTC holders.

What is Germany up to?

The German government’s cryptocurrency wallet saw a significant amount of activity in the last 24 hours. In this time, the wallet moved out 6,307 Bitcoins. At current prices, this sum came out to roughly $362.1 million.

However, the wallet also received 2,810 BTC, amounting to $161.6 million. This suggests that the German government may have been engaged in selling some of its Bitcoin holdings.

The net difference in these transactions translates to a potential sale of 3,497 BTC, valued at approximately $200.5 million. Following these transactions, the German government had 23,964 BTC remaining, valued at around $1.38 billion.

As one might expect, a large sell order from the German government can inject additional sell pressure into the market, which could lead to a temporary sell-off. This effect might be amplified if the market is already bearish and reacts negatively to the news.

However, several factors could mitigate the impact of this sale. For instance, if the government sells gradually, it can minimize the immediate price drop. Additionally, a strong overall market with high buying activity can easily absorb the additional supply.

It’s also crucial to remember that the market may have already priced in some of this impact, especially considering Germany’s previous large sale of seized BTC in June.

Will the bulls bleed?

Analyst Ki Young Ju highlighted an interesting observation regarding the absence of a long squeeze in the current Bitcoin cycle. In a long squeeze, a sudden price drop forces long holders to sell, potentially accelerating the decline.

To gauge the possibility of a long squeeze, analysts often use the long/short squeeze ratio. This ratio, calculated as hourly liquidation volume divided by total taker volume, can indicate an imbalance between long and short positions.

While Bitcoin did see short squeezes near $66,000 this year when short sellers were liquidated and squeezed out, the prior cycle saw four distinct long squeezes around $55,000.

Ki Young Ju’s observation suggests that the current cycle might be ripe for a long squeeze, which could have interesting implications for Bitcoin’s price movement.

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