The crypto market saw a boost in sentiment on Tuesday as a German government entity received over $200 million worth of the asset back from various exchanges.
During Asian morning hours, Bitcoin was trading just above $57,300, reflecting a 3.5% increase over the past 24 hours.
Other major tokens also experienced gains, with Solana’s SOL surging by as much as 6% and Ether (ETH) climbing back above $3,000. Even dogecoin (DOGE) saw a rise of nearly 7%.
The market had been shaken on Monday when BTC briefly dropped to as low as $55,000 after an address linked to the German Federal Criminal Police Office (BKA) sent over $900 million to various addresses.
This sudden movement spooked traders. However, it was later revealed that the BKA received over $200 million back from exchanges such as Kraken, Coinbase, and Bitstamp within the past 12 hours.
Data from Arkham indicates that while the assets were sent to these exchanges, they did not hit the market.
German Government’s Bitcoin Stash
The German government had confiscated a substantial Bitcoin stockpile worth approximately $3 billion from the movie piracy website Movie2k.to.
In January, German police seized 50,000 BTC from the site, marking it as the largest Bitcoin confiscation by law enforcement authorities in Germany to date.
Starting in mid-June, the government had been gradually liquidating over 10,000 BTC, which put downward pressure on the cryptocurrency’s market rate.
Last week, German lawmaker and Bitcoin activist Joana Cotar urged the government to halt its “hasty” Bitcoin selling spree and instead adopt it as a “strategic reserve currency” to protect against risks in the traditional financial system.
Cotar emphasized that Bitcoin could help Germany diversify its treasury assets, safeguard against inflation and currency devaluation, and foster innovation within the country.
She argued that further sell-offs would be counterproductive and not in Germany’s best interests.
Cotar pointed out that other governments, including the United States, are considering or already holding Bitcoin as a reserve currency.
She also extended an invitation to four German politicians to attend the “Bitcoin Strategies for Nation States” event scheduled for October 2024.
German Sell-Off Impacts Bitcoin
In a recent note, Matteo Greco, a research analyst at Fineqia International, highlighted the impact of Mt. Gox and miners’ selling pressure on Bitcoin’s price decline.
He noted that Bitcoin closed the week at around $55,850, representing an 11% decrease from the previous week’s closing price.
Throughout the week, strong selling pressure was evident, with BTC briefly trading as low as $53,500 before rebounding.
The start of Mt. Gox repayments and ongoing selling pressure from miners, following the recent halving, contributed to the high on-chain selling pressure, according to Greco.
As reported, Bitcoin miners are facing a critical phase known as “capitulation” as their profits diminish amidst the recent sell-off in the Bitcoin market.
Miner capitulation occurs when miners reduce their operations or sell a portion of their mined Bitcoin and reserves to sustain their operations, earn yield, or hedge their Bitcoin exposure.
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