As a long-term crypto investor with experience in the market, I view these government sales as bullish for Bitcoin. The historical precedent set by the UK’s sale of gold reserves during Gordon Brown’s tenure serves as an important reminder that governments have a tendency to sell assets at inopportune times, missing out on potential future gains.
As an industry analyst, I’d like to address the ongoing apprehension sparked by recent Bitcoin sales from the US and German governments. Contrary to popular belief, these actions might not be bearish but rather bullish for the crypto market.
As a crypto investor, I observed an increase in Bitcoin’s price volatility yesterday due to interventions by two significant governments. The German Federal Criminal Police (BKA) sold off a portion of their Bitcoin holdings, decreasing it from 50,000 BTC to 45,264 BTC. Simultaneously, the US government moved 4,000 BTC into Coinbase for potential liquidation, keeping a large stash of 213,546 BTC in their reserves.
Why This Is Bullish For Bitcoin (Long-Term)
Travis Kling, the founder of Ikigai Asset Management, expressed his intrigue over the coincidental timing of various Bitcoin sales. “Simultaneously, the US government was disposing of seized Silk Road and Banmeet Singh Bitcoins, the German government was selling off Movie2k’s Bitcoin hoard, and Mt Gox began distributing its long-held Bitcoin stash,” Kling noted via X. The occurrence of these events together leaves me pondering if there might be some coordination or hidden agenda behind them.”
Experts downplay the potential market impact of recent Bitcoin sales, despite apprehensions. Ki Young Ju, CryptoQuant CEO, dismissed the widespread fear, uncertainty, and doubt (FUD). He explained that the US government’s sale of 4,000 Bitcoins was unlikely to cause significant market disruption. Furthermore, he pointed out that Coinbase Prime routinely handles large sell-side liquidity during periods of high Exchange Traded Fund (ETF) inflows and smaller amounts during low ETF inflows.
As a crypto investor, I’ve learned from Skew, the insightful crypto analyst at @52kskew, that when the US government transfers 3.94K BTC to Coinbase Prime, there are generally two possible scenarios. Firstly, these Bitcoins could be sold through over-the-counter (OTC) desks in private transactions to off-market buyers. Alternatively, they might be gradually sold on the open market over an extended period. Regardless of the approach taken, Skew reassures us that the price impact is expected to be minimal.
As a researcher focusing on the cryptocurrency market, I’ve observed that Bitcoin, despite various bearish catalysts, has demonstrated remarkable resilience. The US government’s regulatory uncertainty (FUD), the Mt. Gox fiasco, the completion of most major airdrops, and the overall market downturn haven’t been able to significantly push Bitcoin below $60k. Even with Nvidia stocks off their highs, negative news seems to have minimal impact on the world’s first decentralized digital currency.
Will Gold’s History Repeat Itself For BTC?
As a researcher looking into market trends, I’d like to share my perspective on a long-held optimistic viewpoint: Just as in history, when governments have sold assets, Alistair Milne, CIO of Altana Digital, sees similarities. For instance, Gordon Brown’s decision to sell the UK’s gold reserves for under $300 an ounce is often cited as one of the worst financial moves by a Chancellor of the Exchequer. Currently, Germany and America are making comparable mistakes by selling seized Bitcoin (BTC) at this moment. They can only do so once.
Government selling is bullish
Gordon Brown is well-known for having sold the United Kingdom’s gold reserves at a price below $300 per ounce – an unfortunate move made by a Chancellor of the Exchequer in our nation’s history.
Germany & America are making far worse mistakes by selling seized BTC now. They can only sell once
— Alistair Milne (@alistairmilne) June 26, 2024
During his time as Chancellor of the Exchequer from 1997 to 2007, Gordon Brown chose to dispose of around 60% of Britain’s gold reserves between 1999 and 2002. This era is referred to as “Brown’s Sale” or the “Brown Bottom.”
In the past, gold sales were carried out through auctions with prices fluctuating between $256 and $296 an ounce. These prices represented a significant discount compared to future gold prices which experienced a massive increase, surpassing $1,500 an ounce. This financial decision is often criticized for costing the UK treasury vast amounts of potential revenue.
Additionally, an optimistic perspective exists regarding these upcoming Bitcoin sales. Once completed, these transactions may alleviate a substantial market concern. These sales have been looming over the market like a sword of Damocles; their resolution could eliminate a potential long-term risk for the market, making it wiser to address this issue earlier rather than later.
At press time, BTC traded at $61,117.
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2024-06-27 16:16