The cryptocurrency market for Bitcoin is known for its high levels of volatility, often influenced by large-scale transactions by major holders, commonly referred to as “whales.” Recently, there have been allegations of government entities, such as the German government, selling off Bitcoin, further adding to the market’s instability. However, Ki Young Ju, the CEO of CryptoQuant, believes that the impact of these government influences may not be as significant as perceived.
Over the past few weeks, Bitcoin transactions totaling around $737 million have been made from addresses associated with the US and German governments to well-known exchanges like Coinbase, Bitstamp, and Kraken. These transactions have been interpreted as signs of liquidation, coinciding with a continuous decline in Bitcoin’s value throughout the month. Despite the negative headlines and downward trend, Ju argues that the situation is not as dire as it appears.
According to analysis conducted by CryptoQuant, only around 4% of the total volume moved in the Bitcoin market in 2023, which amounts to over $224 billion, consists of government-seized assets. In absolute terms, this represents approximately $9 billion that has been added to Bitcoin’s realized market value since last year. Compared to the overall market, this amount is relatively modest, indicating a limited impact of government-held Bitcoins on the market’s overall outlook.
Ju took to Twitter to address the issue, emphasizing that the fear, uncertainty, and doubt (FUD) surrounding government selling should not overshadow traders’ decisions. He highlighted that since 2023, $224 billion has flowed into the Bitcoin market, with government-seized BTC contributing only $9 billion to the realized market capitalization. This figure represents just 4% of the cumulative realized value since 2023.
To better understand Bitcoin’s value, it is crucial to consider the concept of realized market capitalization. This approach takes into account the price at which each Bitcoin was last traded, providing a clearer perspective on the actual amount of fiat currency invested in the cryptocurrency and offering a more accurate representation of its value.
Despite recent corrections, which mark the largest since the beginning of the last bull cycle in 2022, caution is still necessary for Bitcoin’s future. In order for prices to continue rising, they need to return to the $60,000 level.
While significant liquidations, including those by governments, can cause short-term volatility and price declines, their long-term impact seems to be overstated. The Bitcoin market has demonstrated resilience, and its maturity is expected to be influenced more by institutional investments rather than isolated large-scale transactions.
Disclaimer: The views and opinions expressed in this article, as well as those of anyone mentioned, are for informational purposes only and do not constitute financial, investment, or any other form of advice. Investing or trading cryptocurrencies carries the risk of financial loss.
Editor’s Choice: The German government has transferred 832.7 BTC and reduced its Bitcoin holdings. Analysts believe that Ethereum could surpass Bitcoin following the launch of ETFs.