The German government recently missed out on $124 million in additional revenue by cashing out its Bitcoin (BTC) holdings too early.
Bitcoin Price Surges After German BTC Crash
On July 13, the German state of Saxony sold 50,000 BTC seized from movie piracy website Movie2k for about $2.87 billion, generating a profit of more than $740 million compared to the $2.13 billion it paid for the acquisition in January.
However, immediately after the selloff, the Bitcoin price surged by up to 16.55%, which was further boosted by the assassination attempt on former US President Donald Trump, which increased his chances of re-election in November.
The Saxon government’s chances of generating maximum returns were highest in March, when BTC hit an all-time high of around $74,000.
In March, theoretically selling 50,000 BTC would have guaranteed the country a profit of $1.5 billion. Meanwhile, the German government missed out on the profit as BTC fell 12% during the sale.
German Government Misjudges Bitcoin’s Potential
The Dresden prosecutor’s office ordered an “emergency sale” of Bitcoin in June, citing concerns that the cryptocurrency’s value could fall by more than 10%.
Related: Bitcoin Oversold After German Government Selloff — ARK Invest
“Selling valuables prior to the conclusion of pending criminal proceedings is required by law if there is a risk of significant loss of value of more than 10%,” the office clarified, adding:
“These conditions have always been met for Bitcoin, which is highly volatile due to its huge and extremely fast price fluctuations.”
The office also stressed that it is illegal for law enforcement to speculate on the value of seized items, especially if they wait for the price to go up before selling them. Instead, the intention behind the emergency sale of 50,000 BTC was to raise funds for the criminal case against movie2k.
“This emergency sale was unprecedented in the Federal Republic of Germany, but it was always achieved at a fair market price,” the Dresden public prosecutor’s office added.
“There has always been significant trading volume in the Bitcoin market.”
This claim fits with the increased demand for Bitcoin among ETF and other fund investors while the German government was selling off Bitcoin.
James Butterfill, researcher at asset management firm CoinShares, noted that for the week ending July 13, “Bitcoin saw its fifth-largest weekly inflow on record at $1.35 billion, while shorted Bitcoin saw its largest weekly outflow since April at $8.6 million.”
He added:
I think the price weakness due to the German government’s Bitcoin sales and the reversal of sentiment due to the lower than expected US CPI led to investors increasing their positions.
Last year, the US government sold off part of its Bitcoin reserves seized from the Silk Road, and countries like El Salvador are officially accumulating BTC as a strategic reserve asset. But recently, there has been more talk that the US will use Bitcoin as its own strategic reserve by 2028.
Related: German Government Rushes to Sell Bitcoin to Maximize Liquidity: Arkham CEO
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.