Data Analysis: German selling may not be the main reason for Bitcoin's recent decline

Compiled by: Felix, PANews

The sale of Bitcoin in Germany has been a hot topic recently. Over the past month, starting around June 19, the German state of Saxony began transferring Bitcoins for sale from wallets associated with the German Federal Criminal Police Office (BKA). BKA legally seized nearly 50,000 Bitcoins (approximately US$2.12 billion) from the operator of Movie2k.to, a movie piracy website active in 2013.

BKA received the Bitcoins in mid-January after the suspect made a "voluntary transfer." Since they started withdrawing Bitcoin from their wallets, their Bitcoin holdings have dropped to 6,894 Bitcoins as of 17:00 on July 12 (UTC+8). (PANews Note: Currently, the sale of this address has been completed and it holds 0.005 BTC)

Since the outflow of funds, the price of Bitcoin has fallen by approximately 11%.

So, is the price drop caused by Germany? The answer is no, at least not directly. Here’s a detailed explanation:

Analyzing trading hours and price movements

To get a better understanding, let’s take a look at the trading hours and monthly price drops over the past few months. The chart is broken down here into European, Asian and US trading hours. The working hours are:

• United States: 8 am to 8 pm Eastern Time (UTC time 13:00-01:00)
• Europe: 8 am to 8 pm Central European Time (UTC time 7:00 -19:00)
• Asia: 8am to 8pm China Standard Time (00:00-12:00 UTC)

Although there will be declines during European trading hours, in the United States The decline was more pronounced during trading hours. Especially in the past 5 days, the monthly decline has mainly occurred during the Asian trading session. This suggests that the German sell-off was not directly responsible for much of the price decline, as German government officials likely did not sell their Bitcoin holdings overnight.

It is worth noting that wallet traffic data also proves this “fact”.

Wallet Traffic Data

Wallet Traffic Data provides further insights. The German authorities do not appear to be selling their Bitcoin holdings over the counter, but appear to be active on exchanges. This has the benefit of allowing further exploration of its behavior.

This article observes the outflow of wallets during the day (Europe), and the return flow of wallets from around 6 to 8 pm (UTC time, that is, German night time).

Why do they do this? It appears that limit sell orders are set during the day, and when officials go home at night, they close and withdraw all outstanding limit orders and transfer the remaining Bitcoin back to wallets. This is probably for security reasons as they don’t want to leave large amounts of Bitcoin on the exchange overnight (at least they seem to understand the phrase “not your keys, not your coins!”).

Impact on the Market

The direct impact of the German authorities selling Bitcoin appears to be minimal relative to the overall market. Even on days when there are significant outflows, such as June 8, when approximately $740 million (approximately 123,600 Bitcoins) occurred, this amount is small compared to overall market liquidity. Actual transaction volume typically ranges from $10 billion to $35 billion, according to Messari data. Overall, the Bitcoin market is highly liquid.

The reason for Bitcoin’s recent decline is more likely to be that the negative narrative played an important role. The sell-off surrounding Germany, along with news that Mt. Gox will pay its creditors, may prompt people to sell Bitcoin.

Conclusion

All in all, while the actions of the German government have had some impact, they are not the main reason for the recent price decline (at least not directly). The impact on Bitcoin price movements is more indirect, with narrative and sentiment playing a larger role.

The latest data shows that the German state of Saxony has sold out 50,000 Bitcoins. Will this month go down in history like Bitcoin Pizza Day? Maybe call it Bitcoin Keine Ahnung (BKA).

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