In the ever-changing cryptocurrency market, a heavy piece of news has hit like a deep-water bomb, instantly stirring up ripples — the UK plans to sell off Bitcoin worth £7 billion, a move that is pulling the entire crypto community into an unprecedented grand game.
Cross-border disputes caused by illicit profits
The story begins with a shocking Ponzi scheme in 2018. The main culprit, Qian Zhimin, fled to the UK after defrauding in China with £5 billion in illicit gains, turning this huge amount into Bitcoin. He hired a Chinese national, Jian Wen, to carry out money laundering activities and even purchased luxury mansions. However, the long arm of the law ultimately caught up with him, and the London police seized 61,000 BTC. Dramatically, over time, this batch of assets originally worth £300 million soared 20 times in six years, now valued at £5.4 billion.
Currently, 130,000 Chinese victims are collectively claiming compensation, demanding the return of their property. However, the British court is attempting to forcibly allocate this Bitcoin to the treasury, a decision that has sparked fierce controversy and even caused ripples in the diplomatic realm between China and the UK. Some analysts bluntly state that when a sovereign nation faces enormous profits, judicial justice seems to crumble, and this action by the UK government resembles that of 'on-chain bandits'.
Failed tender custody, risk is imminent
The UK Home Office spent £40 million to tender a custody institution to properly handle this batch of Bitcoin. But astonishingly, the tender contract contained absurd clauses requiring suppliers to bear four years of security risks while only providing 'pure commission' remuneration. This unreasonable requirement led top custodians like Coinbase and Anchorage to choose to back off.
What is even more concerning is that the currently valued $7 billion in BTC is only being managed by the London Metropolitan Police in a 'seal and storage' manner. In the world of cryptocurrency, such protective measures are essentially ineffective, and global hackers have long regarded it as an 'unprotected nuclear bomb', eyeing it covetously and ready to launch an attack at any moment.
Market chain reaction triggered by sell-offs
From a technical perspective, if the UK sells off these 61,000 BTC in a single day, the sale volume would account for 12% of the global spot trading volume. If we refer to Germany's previous model of selling 50,000 BTC in batches, it is highly likely that the Bitcoin market could fall into a prolonged downtrend.
On the emotional front, the liquidation actions of national-level whales undoubtedly send a signal to the market that the officials are bearish on Bitcoin. At that time, hedge funds are likely to take the opportunity to short, and the panic index VIX soaring will become a high-probability event.
However, the market is not without opportunities for reversal. The daily net inflow of spot ETFs from institutions like BlackRock and Fidelity reaches as high as $320 million. If these institutions can absorb the UK's sell-off, it will become an 'epic backstop advertisement' for the Bitcoin market, triggering a new round of attention and confidence in the market.
Replaying history and warning
Looking back at history, in 2000, UK Chancellor Gordon Brown sold off gold reserves at $275/ounce, which resulted in a 600% surge in gold prices over the next decade. This event is known as the 'Brown's Folly' gold disaster. Now, the Bitcoin market seems to be replaying this scene. Salvadoran President Bukele once sarcastically remarked that the UK is selling off at the market bottom, while the Salvadoran treasury holds 6,244 BTC, already making a profit of $440 million.
Ironically, the US has already established a strategic Bitcoin reserve by 2025, viewing BTC as a gold-level strategic asset. This undoubtedly makes the UK’s sell-off plan seem even more ill-timed and sends a signal to the market: the government's sell-off actions may very well be the trumpet call for a bull market.
Retail investors' desperate counter-kill strategy
For retail investors, there is still a chance to fight back in this storm:
Timing kill: Due to legal disputes, the sale plan for this batch of Bitcoin may be delayed by 1 to 4 years. During this period, Bitcoin may have the opportunity to surge to $150,000, allowing retail investors to lay out their spot leverage in advance and wait for the right time to profit.
Emotional counter-manipulation: When the news of the sell-off intensifies and triggers panic selling in the market, this often presents a good buying opportunity. Referring to the historical performance where Bitcoin rebounded 37% within 30 days after Germany's sell-off, one can seize the profits brought by market sentiment reversals.
Hedging weapon: Buying MicroStrategy stock is also a good option. Because the more aggressively the state sells off, the more listed companies will need to stabilize their assets, increasing their buying efforts. Retail investors can use this to hedge risks and gain profits.
What shocking conspiracy is hidden behind?
From a broader perspective, some believe the UK’s Bitcoin sell-off is part of a conspiracy to decentralize BTC globally. Ultimately, this £7 billion chip may flow into the vaults of institutions like BlackRock, achieving a class leap from 'criminal proceeds' to 'strategic reserve'.
In this grand game of the crypto world, we should perhaps remember: when a country sells off Bitcoin, it is also a moment of sovereign validation for Bitcoin; and the debates surrounding judicial disputes are a victory for the spirit of decentralization. In the jungle law of the crypto world, when government decisions appear clumsy, it may be an excellent opportunity for those astute crypto investors to acquire wealth.
