The Bitcoin market has been plagued by multiple whale sales since June. The majority of these sales have come from miners and a few other whales, although recent news has emerged that the German government also sells its shares.
Due to the enormous size of the transactions, government sale can be classified as whale movements. Many market participants can also argue that they have contributed to a increase in selling pressure and a drop in the price of Bitcoin.
However, Ki Young Ju, founder and CEO of CryptoQuant, disagrees with this line of thinking. According to him, reactions to government-linked wallet selloffs are generally overstated. Interestingly, his opinion is based on the cumulative value of Bitcoin inflows over the past year.
Government Bitcoin Sales Are Overstated
Addresses linked to the U.S. and German governments have collectively sent more than $737 million worth of Bitcoin to crypto exchanges Coinbase, Bitstamp, and Kraken over the past two weeks. These transfers, by their very nature, could be nothing more than a sell-off on the exchanges.
It is notable that these transfers occurred while the price of Bitcoin had already been falling for a month, which only added to the selling pressure.
While headlines about “governments dumping Bitcoin” may create fear, uncertainty, and doubt (FUD) in the crypto community, the problem is actually not that big. While it’s true that governments liquidated some of their Bitcoin investments, the sell-off wasn’t 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 that being tied to assets seized by governments. Further, the data shows that BTC seized by governments has contributed around $9 billion to the realized market cap since 2023.
Government #Bitcoin selling is overrated.
Since 2023, $224 billion has flowed into this market. Government-seized BTC contributes about $9 billion to the realized market cap.
It’s only 4% of the total cumulative realized value since 2023. Don’t let government FUD selling ruin your trades. photo.twitter.com/12fy2sKsXH
— Ki Young-Ju (@ki_young_ju) July 5, 2024
If we go by this realized market cap data, it’s clear that government-owned Bitcoins don’t really 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 money 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 taken the crypto fall with the greatest magnitude since the bull cycle began at the 2022 low. The crypto is not out of the danger zone yet not yet. The bulls need to keep pushing the price towards the $60,000 area before Bitcoin can resumes its upward trend.
Main image by Getty Images, chart by TradingView