Germany already lost out on $124M profit selling its Bitcoin
2024.07.21 15:09
The German government recently missed out on an extra $124 million in Bitcoin (BTC) gains by cashing in its holdings a bit too soon.
Bitcoin price jumps right after Germany’s BTC dump
On July 13, Germany’s Saxony state completed the sale of the 50,000 BTC stash it seized from movie piracy website, movie2k, generating around $2.87 billion. In doing so, they secured a profit of over $740 million when compared to their acquisition cost of $2.13 billion in January.
German government’s cumulative profits from Bitcoin sales. Source: Arkham Intelligence
However, right after their sale, Bitcoin prices skyrocketed by up to 16.55%, driven higher by the assassination attempt on former United States president Donald Trump, which has since boosted his odds of a reelection in November.
The Saxony government’s odds of generating maximum returns were the highest in March, when BTC refreshed its record high to around $74,000.
BTC/USD daily price chart. Source: TradingView
A theoretical sale of 50,000 BTC in March could have secured $1.5 billion in profits for the state. Meanwhile, BTC’s 12% decline during the course of the German government’s sales also led to missed profits.
German gov’t misjudged Bitcoin potential
The Dresden Public Prosecutor’s Office ordered the “emergency sales” of Bitcoin in June under the impression that the cryptocurrency’s value may drop by more than 10%.
Related: Bitcoin oversold after German gov’t sell-off — ARK Invest
“The sale of valuable items before the conclusion of ongoing criminal proceedings is legally required whenever there is a risk of a significant loss of value of around ten percent or more,” the office clarified, adding:
“These conditions were always met with the volatile Bitcoins due to the enormous and extremely rapid price fluctuations.”
Additionally, the office emphasized that it is illegal for enforcement agencies to speculate on the value of seized items, particularly by waiting for prices to increase before selling. Instead, their intention behind the emergency sales of 50,000 BTC was to secure funds for criminal proceedings against movie2k.
“In this emergency sale, which was unprecedented in the Federal Republic of Germany, a fair market price was always achieved,” the Dresden Attorney General office wrote, adding:
“There was always considerable trading volume in the Bitcoin market.”
This statement coincides with a rising demand for Bitcoin among ETF and other fund investors during the time of the German government’s BTC sales.
“Bitcoin saw the 5th largest weekly inflows on record with $1.35 billion, while short-bitcoin saw the largest weekly outflows since April at $8.6 million,” noted James Butterfill, researcher at asset management firm CoinShares for the week ending July 13.
Crypto funds net flow. Source: CoinShares
He added:
We believe price weakness due to the German Government bitcoin sales and a turnaround in sentiment due to lower than expect CPI in the US prompted investor to add to positions.
Last year, the US government sold a portion of its Bitcoin stash seized from Silk Road, while nations like El Salvador are officially accumulating BTC as a strategic reserve asset. Recently, however, there has been more talk of the US using Bitcoin for its own strategic reserve as soon as 2028.
Related: German gov’t was rushing to sell Bitcoin to maximize liquidity: Arkham CEO
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
