German government: 90% of 50,000 bitcoins are sold in OTC transactions, and the bitcoin crash has nothing to do with it

The German government has clarified its recent Bitcoin sales, stating that over 90% were conducted through over-the-counter (OTC) transactions, not impacting the market price directly.

Sale Details

Starting from 19th June, nearly 50,000 Bitcoins were transferred to exchanges like Coinbase, Kraken, and Bitstamp.

The sales concluded last weekend, raising approximately €2.64 billion.

Limited Market Impact

Yesterday, the German government issued an announcement regarding the sale of Bitcoin, saying that the sales process lasted about 3.5 weeks, and they sold nearly 50,000 Bitcoins in total, raising approximately 2.64 billion euros.

Official documents reveal that less than 1% of these sales occurred through regular trading channels.

The majority, over 90%, were OTC transactions, which are considered market-friendly and less likely to affect Bitcoin’s price directly.

Market Reactions

Despite the government's assurances, Bitcoin's decline since late June might be partly attributed to negative market sentiment surrounding these sales and Mt. Gox's repayment process.

Mt. Gox Repayments

The biggest potential negative impact on the market currently is the ongoing repayments by Mt. Gox.

The volume involved is nearly three times that of the German government's sales, with repayments made in Bitcoin, which could influence the market.

Expert Analysis

Alex Thorn, Galaxy's research head, analysed the situation at the end of June, suggesting that the eventual sell pressure from Mt. Gox would be less than expected.

Repayment Breakdown

Approximately 75% of Mt. Gox creditors opted for early payouts, accepting a 10% reduction.

Thus, around 95,000 Bitcoins are used for early compensation, with the remaining Bitcoins to be paid out over a longer period:

• About 20,000 tokens belong to a claims fund.

• 10,000 tokens belong to Bitcoinica BK.

• Around 65,000 tokens are owed to individual creditors.

Long-Term Holders

Thorn predicts that individual creditors, mainly long-term Bitcoin holders and early adopters, are less likely to sell immediately:

• They declined attractive offers from claims funds over the years, indicating a preference for Bitcoin over cash compensation.

• Selling could incur significant capital gains tax due to Bitcoin’s substantial value increase since the bankruptcy.

While Germany's Bitcoin sales appear to have been managed carefully, the broader market sentiment and Mt. Gox repayments are the more likely culprits for the recent Bitcoin price declines.