The bitcoin market has been plagued by Several whale liquidations since June. Most of these sales have come from miners and a few other whales, although news has recently emerged that bitcoin/bitcoin-selloff-german-govt-another-67-million/” target=”_blank” rel=”noopener nofollow”>German Government It is also selling its holdings.
Due to the enormous scale of transactions, bitcoin-news/german-parliament-member-urges-government-to-cease-selling-bitcoin/” target=”_blank” rel=”noopener nofollow”>Sales by the government can be classified as whale movements. Many market participants may also argue that they have contributed to abitcoin/bitcoin-further-crash-to-47000/” target=”_blank” rel=”noopener nofollow”> increased selling pressure and a drop in the price of bitcoin.
However, Ki Young Ju, founder and CEO of CryptoQuant, does not share this line of thinking. According to him, reactions to the sell-offs of government-linked wallets are mostly overhyped. Interestingly, his opinion is based on the cumulative value of bitcoin inflows over the past year.
Government bitcoin Sales Are Overhyped
Addresses linked to the US and German governments have collectively sent more than $737 million worth of bitcoin to cryptocurrency exchanges Coinbase, Bitstamp and Kraken over the past two weeks. These transfers, by their nature, can only be mass sales on the exchanges.
Particularly noteworthy is the fact that these transfers have occurred amid a month-long decline in the price of bitcoin, which has further contributed to the selling pressure.
However, while headlines about “governments dumping bitcoin” may generate fear, uncertainty, and doubt (FUD) in the cryptocurrency community, the problem is actually not that serious. While it is true that governments have liquidated a portion of their bitcoin investments, the sell-off was actually not that big in the grand scheme of things.
According to CryptoQuant data shared by Ki Young Ju, bitcoin has received inflows of over $224 billion since 2023, with only 4% of these tied to assets seized by governments. Furthermore, the data shows that btc seized by governments has contributed about $9 billion to the realized market cap since 2023.
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Government twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>#bitcoin The sale is overestimated.
Since 2023, $224 billion has flowed into this market. Government-seized btc contributes around $9 billion to the realized limit.
It's only 4% of the total cumulative value realized since 2023. Don't let government FUD selling ruin your operations. image.twitter.com/12fy2sKsXH
— Ki Young Ju (@ki_young_ju) twitter.com/ki_young_ju/status/1809293501084909592?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>July 5, 2024
Judging by this realized market cap data, it is obvious that government-owned bitcoins do not actually have much power and are minuscule compared to the funds available in the market. Realized market cap is a unique way to look at the true valuation of bitcoin. It takes into account the last price when each btc last moved from its current position. This gives a more accurate picture of how much fiat currency has actually flowed into btc.
Current state of bitcoin
At the time of writing, bitcoin is trading at $57,360 and is starting to recover some of its seven-day losses. Recent corrections have seen the cryptocurrency x.com/PeterLBrandt/status/1809652239851507841″ target=”_blank” rel=”noopener nofollow”>Fall in the largest magnitude since the bullish cycle began at the 2022 low. The cryptocurrency isbitcoin-news/bitcoin-reclaims-56k-but-still-faces-potential-drop-to-47k/” target=”_blank” rel=”noopener nofollow”> Not out of danger yet. The bulls must continue to push the price towards the $60,000 territory before bitcoin can bitcoin-price-will-reach-its-cycle-highs/” target=”_blank” rel=”noopener nofollow”>resumes its upward trend.
Featured image from Getty Images, chart from TradingView
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