A state in Germany is having a fire sale on bitcoin. And the unloading of its considerable holdings — once worth more than $3 billion — is coinciding with a crash in the cryptocurrency’s value. What’s going on?

Around the world, governments maintain the right to seize and resell property associated with crimes. The recent example of this occurring in Germany is demonstrating how asset forfeiture might even impact the global crypto market.

Germany’s central criminal investigation agency, the Bundeskriminalamt or BKA, conducted a joint operation that included the Saxony State Criminal Police Office, the Integrated Investigation Unit Saxony (INES) and the U.S.’s Federal Bureau of Investigation that resulted in Saxony, a German state whose capital is Dresden, gaining ownership of around 50,000 bitcoin (BTC) from Movie2k.to, a website found guilting of money laundering and other illegal activities.

At the time of the repossession, in January 2024, those bitcoins were valued around $2.2 billion. When bitcoin hit its all-time high of $73,700 in March 2024, that valuation ballooned to $3.685 billion.

This week, that BTC position has decreased dramatically. Bitcoin.com News reported Tuesday that “onchain data collected at 12 p.m. EDT on July 9 indicates that the German government has sold 3,840 BTC valued at $220.7 million since 4:30 p.m. EDT on July 8.”

According to Arkham Intelligence, the German government’s bitcoin wallet now holds roughly 32,488 BTC. At bitcoin’s current price of $57,648.20, that remaining position is worth more than $1.87 billion. For crypto investors, the prospect of the country continuing to offload its holdings could create ongoing concern about increased volatility and lower prices.

Could Germany’s fire sale push bitcoin prices lower?

Bitcoin had been enjoying a record-setting year in 2024. But after setting its all-time high in March, the value of largest crypto by market cap has slowly deteriorated, sliding by over 21%.

According to the German government’s official statement in January, a determination of what to do with the bitcoins had not been made. Fast-forward to July, though, and that stance seems have to changed.

The crypto news site Coindesk reported that Saxony officials have no choice but to offload the forfeited assets, stating that “what’s happening in Germany isn’t a bad investment strategy — it is merely standard procedure that applies to assets confiscated in criminal investigations,” said Dr. Lennart Ante, cofounder and CEO of German-based Blockchain Research Lab.

“Seized assets are always liquidated within a certain period. This is a routine business process, although at a larger-than-normal scale.”

Although the Saxony government is officially in possession of the assets, the BKA is being tasked with its liquidation because of technical know-how involved.

Nonetheless, concerns about the fire sale’s impact on bitcoin prices may be overblown, according to Gabor Gurbacs, founder of PointsVille, an end-to-end alternative asset factory that aims to bridge the gap between emerging digital financial technologies and traditional asset classes.

Despite the German government liquidating more than $220 million in BTC in a single day, bitcoin’s price barely moved 2%, Gurbacs said in a post on X. “This is what a mature market looks like,” Gurbacs wrote.

Bitcoin’s price has in fact already recovered from that 2% loss, having gained 4.2% since Tuesday’s low.

Similar to traditional equity markets like stocks, current volatility does not dictate long-term price action. However, given the amount of bitcoin the German government still holds and is obligated to sell, speculative traders looking for short-term gains may be able to take advantage of looming fluctuations.

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