CoinWire reports:
Germany’s transfer of a significant amount of BTC between accounts has caused market uncertainty. The correlation between BTC and traditional investment and asset classes has decreased.
The recent sharp decline in Bitcoin (BTC) has escalated negative sentiments within the cryptocurrency market.
Germany Takes Action
According to blockchain data analytics firm Arkham, the German government transferred 700 Bitcoin on July 7, a move with substantial financial implications.
The transaction, valued at approximately $40.55 million, was sent to an unmarked address, prompting speculation about its purpose.
While the exact reason for the transaction remains unclear, the address could be associated with financial institutions or over-the-counter (OTC) services.
OTC services cater to large investors looking to conduct substantial cryptocurrency transactions outside traditional exchanges.
At the time of this transaction, Germany still holds a significant amount of Bitcoin. The German government currently possesses approximately 39,826 BTC, valued at around $2.31 billion.
This sizable holding suggests that the German government has potential long-term strategic interests in cryptocurrencies.
The unmarked address linked to the transfer has raised uncertainties about its purpose. Some may fear it signals a precursor to a large-scale sell-off by the German government, prompting investors to sell holdings before further price declines.
Decreasing Correlations
Furthermore, the relationship between Bitcoin and traditional stock markets has notably weakened. This indicates that Bitcoin’s price movements are no longer closely tied to stock market fluctuations as they were in previous years.
This decline in correlation is the most pronounced in four and a half years.
Analyst Will Clemente suggests this could be due to a specific situation of Bitcoin supply surplus.
This surplus is believed to originate from multiple sources, including Germany, the United States, and Mt.Gox, a now-defunct Bitcoin exchange that lost significant Bitcoin several years ago.
Read Bitcoin [BTC] Price Predictions for 2024-25
The surplus supply has exerted downward pressure on Bitcoin prices, pressure unrelated to the stock market’s conditions.
As of the time of writing, BTC is trading at $57,482.70, marking a 1.42% increase in the past 24 hours. Concurrently, BTC’s trading volume has decreased by 47.14%.