Crypto markets are stabilizing after days of massive selling.
The German government address transferred more than 10,000 bitcoins it held to crypto exchanges and market makers in several batches. The price of bitcoin once fell below $55,000. However, Arkham Intelligence data showed that during the closing period of the U.S. stock market (corresponding to around 01:56 AM on Tuesday morning Beijing time), the German government address received 2,898 bitcoins returned by the exchange, equivalent to approximately $163 million, mainly from Coinbase, Kraken and Bitstamp.
Steven Zheng, head of research at The Block, analyzed that the exchange is likely to return the Bitcoin because it cannot sell it within the target price range.
“Considering that some bitcoins have been returned from Coinbase to the German government address, it can be assumed that they are unsold bitcoins that were part of a sales agreement between the cryptocurrency exchange and the country,” said Steven Zheng.
According to Bitpush data, BTC hit about $55,200 early Monday afternoon, and then rebounded to $56,662.40 after the U.S. stock market closed, a 24-hour increase of 0.58%.
Altcoins were mixed, with more losses than gains among the top 200 tokens by market cap. Aelf (ELF) led the gains, up 21.5% to trade at $0.421, while Celestia (TIA) and Curve DAO Token (CRV) rose 14.5% and 10.1%, respectively.
The current overall market value of cryptocurrencies is $2.07 trillion, and Bitcoin’s market share is 53.5%.
As for U.S. stocks, as of the close, the S&P 500 and Nasdaq 500 rose 0.10% and 0.28% respectively, while the Dow Jones fell 0.08%.
Is the impact of German government selling pressure exaggerated?
According to Arkham data, the German government's sell-off is nearly halfway complete. Since the sell-off began last month, its BTC holdings have fallen from nearly 50,000 to 27,461, with current holdings worth $1.5 billion.
Recent industry headlines have focused on events such as the German government sell-off and Mt. Gox refunds, which many analysts believe are the main reasons for the recent Bitcoin plunge, but Bitfinex analysts attribute the decline to normal seasonal weakness.
Bitfinex analysts said: "It is worth noting that the actual market value of Bitcoin that has flowed into the market since 2023 (that is, the value of Bitcoin bought and sold) is as high as $224 billion. In contrast, the Bitcoin seized and subsequently sold by governments including the United States and Germany is only about $9 billion. This accounts for only 4% of the total actual market value since the beginning of 2023."
“Despite the huge notional value, the amount of Bitcoin actually transferred to exchanges is only in the hundreds of millions of dollars, suggesting that the actual impact of government-seized Bitcoin on the market and the excess supply is relatively small,” the analysts added. “This suggests that while sales of seized assets are important in individual transactions, their overall impact on market dynamics and Bitcoin price stability is not as large as it might initially appear.”
Institutional investors see it as a buying opportunity
Despite the market decline, data released by CoinShares showed that inflows into digital asset investment products reached $441 million last week.
Among them, Bitcoin investment products accounted for the largest share of the total inflow of crypto products ($398 million) – 90%. From a regional perspective, inflows mainly came from the United States, with an inflow of $384 million. Other high buying orders came from Hong Kong, China, Switzerland and Canada, with inflows of $32 million, $24 million and $12 million respectively. Germany had an outflow of $23 million.
Analyst: BTC may have reached a local bottom
Bitfinex analysts say BTC may have reached a potential local bottom.
Data provided by Bitfinex shows that the funding rate for BTC perpetual contracts has turned negative for the first time since hitting a bottom on May 1.
Historically, periods of negative funding rates combined with low short-term SOPR values (a financial metric that measures the profits or losses realized by a specific group of investor wallets on a given day) have typically marked the bottom of price corrections.
"This could be seen as a buildup of bearish sentiment, but it also reinforces the idea that BTC could be stabilizing or approaching a potential bottom as the balance of buy and sell pressures evolves," the analyst said. "A negative indicator suggests that selling pressure is high or sellers are dominating the market, but it could also indicate that the market is oversold. When such oversold conditions coincide with a rise in the SOPR, it often suggests that the market is bottoming out."
“The RSI indicator shows that Bitcoin has reached oversold conditions for the first time since August, just before an upside squeeze,” analysts at Secure Digital Markets said in their report. “For Bitcoin to gain further momentum, the price needs to break through $58,500, while a break above $60,500 would mark a return to bullish territory.”
Ed Hindi, chief investment officer of Tyr Capital, believes that the current pullback is only temporary and insists that the price of BTC will reach six figures by the end of this year. Ed Hindi said in an interview with CNBC: "Bitcoin is currently in a correction range due to miners and governments selling Bitcoin inventory, but we believe that long-term investors and speculators will continue to buy on dips. We see no reason to change the target of $100,000 for Bitcoin by the end of 2024."
