As of late Monday, bitcoin prices were lower by nearly 10% over the past week amid concerns that so-called whales were liquidating or trimming positions in the largest cryptocurrency. The German government qualifies as a large institutional trader and it has been selling significant amounts of bitcoin.
Entering Monday, the German government held about $1.9 billion in bitcoin following a spate of recent sales. The government possessed bitcoin following a January raid in which police in the state of Saxony seized 50,000 bitcoin from criminals, worth $2.2 billion at the time. The Federal Criminal Police Office (FCPO) commenced sales of bitcoin last month, divesting 900 bitcoin.
That was a modest sale compared to 9,983.722 bitcoin moved to five different exchanges Monday, and that doesn’t include 1,000 units of the digital currency the FCPO moved in over-the-counter fashion. Bitcoin sales by German officials come at a time when the digital asset is already slumping amid fears that the Mt. Gox creditor compensation will bring a raft of supply to market as those creditors look for cash compensation rather than sticking with bitcoin.
Still, some experts believe both events are minor in the longer-ranging bitcoin outlook, while others think Germany is being too hasty in divesting its bitcoin holdings.
Germany Should Be Bitcoin Investor, Not Seller, Says Pol
German Member of Parliament Joana Cotar said her country’s government should be holding its bitcoin reserves, not selling them. In an X post last week, Cotar described Germany’s bitcoin sales as “hasty.”
“Instead of holding bitcoin as a strategic reserve currency, as is already being debated in the USA, our government is selling on a large scale,” she opined.
Cotar, a long-time bitcoin advocate, added that Germany’s bitcoin sales are “counterproductive” and “not sensible.” The founder of “Bitcoin in the Bundestag,” Cotar is herself a bitcoin investor and a believer that governments should hold the digital currency.
“Holding bitcoin as a strategic reserve asset could be helpful for any nation-state,” she wrote.
Currently, the U.S., U.K., and German governments are the largest public sector holders of bitcoin, but that’s mostly by way of asset seizures against criminals and nefarious hackers. Only El Salvador permits the use of bitcoin as legal tender.
Regarding Germany, Cotar argued the government in the eurozone’s largest economy should reconsider its position on selling bitcoin because the cryptocurrency can be a hedge against inflation and euro weakness.
“Cotar argued bitcoin offered an opportunity to diversify the state’s assets, reducing risk associated with traditional investments. She also suggested that due to bitcoin’s scarcity and deflationary nature, it can serve as a hedge against inflation and currency depreciation,” reported James Hunt for The Block.
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