Germany has lost $124 million in profits from selling Bitcoin

Author: Yashu Gola, CoinTelegraph; Compiled by Wuzhu, Golden Finance

The German government recently missed out on an additional $124 million in gains by cashing out its Bitcoin holdings too early.

Bitcoin prices rose immediately after Germany sold off Bitcoin

On July 13, the German state of Saxony completed the sale of 50,000 Bitcoins seized from the movie piracy website movie2k, making a profit of approximately $2.87 billion. Compared to the acquisition cost of $2.13 billion in January, they made a profit of more than $740 million.

German government's accumulated profits from Bitcoin sales. Source: Arkham Intelligence

However, shortly after the Bitcoin sale, Bitcoin prices surged by 16.55%, mainly due to the assassination of former US President Donald Trump, which increased the possibility of his re-election in November.

The possibility of the Saxony government making the biggest return was highest in March, when BTC hit a record high of around $74,000.

BTC/USD daily price chart. Source: TradingView

In theory, selling 50,000 bitcoins in March could have brought the government a profit of $1.5 billion. At the same time, bitcoin fell 12% during the German government's sale, causing the government to miss out on profits.

Germany misjudged Bitcoin's potential

The Dresden Public Prosecutor's Office ordered an "urgent sale" of Bitcoin in June because they believed the cryptocurrency's value could fall by more than 10%.

"As long as there is a risk of a significant depreciation of approximately 10% or more before the conclusion of ongoing criminal proceedings, valuables must be sold according to law," the office clarified, adding:

"Bitcoin always meets these conditions due to its large and extremely fast price fluctuations."

In addition, the office stressed that it is illegal for law enforcement agencies to speculate on the value of seized items, especially waiting for the price to rise before selling them. Instead, their urgent sale of 50,000 Bitcoins was intended to raise funds for the criminal case against movie2k.

“In this unprecedented emergency sale in the Federal Republic of Germany, a fair market price was always achieved,” the Dresden Attorney General’s Office wrote, adding:

“The trading volume on the Bitcoin market has been high.”

The statement coincides with the increasing demand for Bitcoin from ETF and other fund investors during the German government’s sale.

“Bitcoin saw its fifth-highest weekly inflows on record at $1.35 billion, while short Bitcoin saw its highest weekly outflows since April at $8.6 million,” James Butterfill, a researcher at asset management firm CoinShares, noted in a report for the week ending July 13.

Crypto Fund Net Flows. Source: CoinShares

We believe investors increased their holdings due to price weakness from the German government selling Bitcoin and improved sentiment due to lower-than-expected US CPI.

Last year, the US government sold some of its Bitcoin reserves seized from Silk Road, while countries like El Salvador officially accumulated BTC as a strategic reserve asset. However, recently there has been more discussion about the US using Bitcoin for its own strategic reserves as early as 2028.