Since June, the price of Bitcoin (BTC) has been on a decline, largely due to the German government's sell-off (and concerns about potential sales from Mt. Gox distributions). This activity has sparked numerous questions. Below are some key highlights.

Figure 1. The BTC price chart of the German government's BTC inflows and outflows since June 18, 2024.

The key BTC movements by the German government:

The German government held approximately $2 billion in Bitcoin, seized from the operators of Movie2k.to, a movie piracy site active in 2013. They began selling these assets 20 days ago, on June 18, 2024, with the most recent action occurring just a few hours ago. Overall, the German government has:

• Deposited 9,983 BTC (~$591 million) directly to a centralized exchange (CEX);
• Moved 19,521.7 BTC (~$1.14 billion) to wallets likely belonging to B2C2, Flow Traders, and Cumberland, possibly for an over-the-counter (OTC) transaction;
• Received back 7,106 BTC (~$412 million), mostly from CEX at a lower price;
• Currently holds 27,461 BTC (~$1.55 billion).

Fig 2. The current BTC holdings of the German government.

These on-chain activities raise several questions:

1. Why move directly to CEX and sell on the spot market instead of OTC?

• Typically, organizations sell via OTC to avoid causing panic and creating a negative market impression. However, the German government chose to move directly to CEX, causing market panic and significant volatility.

2. Why withdraw BTC after moving to CEX?

• Interestingly, they also withdrew BTC from CEX after causing market turbulence, often following a price drop. This might indicate a realization that spot selling was not a good idea, prompting a shift to OTC sales. This seems plausible given the transfer of funds to Flow Traders and Cumberland, which usually handle OTC deals.
• However, the continued movement of funds to and from CEX suggests either an intent to create market panic or internal operational disorganization within the German government's departments handling the sell-off.

3. Why did the price drop so significantly given the relatively small sell-off compared to BTC's daily volume?

• The daily volume of BTC is around $36 billion, making the German government's sell-off comparatively small. The significant price drop is likely due to the psychological impact of on-chain movements on traders.
• Frequent news reports about the German government moving BTC to CEX contributed to market anxiety. Market makers might also be driving the price based on these news reports.

In conclusion, we believe this is a one-off event that will not affect the overall bullish trend of BTC in 2024. According to our latest AI model, we still predict that BTC will reach $100,000 by the end of this year, and such fluctuations are merely temporary (more details here).

Fig 3. The BTC fund movements of the German government since June 18, 2024.