CoinWorld report:
On Friday, July 5, Bitcoin experienced a short-term plunge below $54,000. The German government recently transferred over $175 million worth of Bitcoin to multiple cryptocurrency exchanges, including Coinbase, Kraken, and Bitstamp, leading to significant national selling pressure seen as a key factor in the market downturn. German Federal Parliament member Joana Cota has called on the government to halt the selling, citing potential long-term negative impacts on cryptocurrency market stability.
German Federal Parliament member Joana Cotar strongly criticized the government’s recent decision to sell large quantities of Bitcoin. She viewed this action as counterproductive and compared it to the United States’ strategic perspective on Bitcoin, highlighting how in the U.S., Bitcoin is considered a strategic reserve currency, contrasting with what she deemed the short-sightedness of the German government’s selling behavior.
She expressed her concerns to Saxony State Minister Michael Kretschmer, Minister of Finance Christian Lindner, and Finance Minister Olaf Scholz, urging them to reconsider this strategy. The German Bitcoin sell-off reportedly stemmed from an investigation into the illegal movie streaming website Movie2k.to, resulting in the seizure of approximately 50,000 Bitcoin, currently valued at over $3 billion.
She emphasized the counterproductive nature of this approach and invited officials to participate in a lecture event titled “National Bitcoin Strategy” scheduled for October 17. The event will feature JANE CEO and renowned Bitcoin strategist Samson Mow as a speaker.
Discussions will focus on how political decision-makers can leverage Bitcoin to promote national economies. Market expectations indicate that Mow will delve into the potential benefits of incorporating Bitcoin into national financial strategies, a topic garnering increasing global attention.
The event will also discuss the issuance of government bonds supported by Bitcoin to attract a new class of investors interested in fixed-income securities priced in Bitcoin. Mow suggested that these bonds could provide stable funding for essential infrastructure projects, stimulating economic growth and innovation.
This event, akin to El Salvador’s groundbreaking move in 2021 to adopt Bitcoin as legal tender, underscores the transformative potential of such initiatives. Mow has previously advised governments of countries like El Salvador and Mexico, lending credibility to his recommendations.
According to blockchain data tracking firm Arkham Data, over the past two days, the German government has transferred 1,300 Bitcoin totaling approximately $76 million to exchanges such as Kraken, Bitstamp, and Coinbase. They have also moved 1,700 Bitcoin worth around $99 million to other addresses. These funds may be destined for institutional services or off-exchange trading deposits, with the German government reportedly still holding 40,359 Bitcoin in marked addresses, totaling around $23 billion.
Bitcoin’s price has dropped over 18% in the last 30 days, with daily trading volume down by 32% in the same period. Multiple indicators suggest that Bitcoin may experience a deeper pullback, making a swift recovery from these losses unlikely in the coming days.
The sustained downward trend of Bitcoin aligns with predictions made by experts at 10x Research, who view this decline as a potential price floor. They caution that this significant drop may be just the beginning, with Bitcoin possibly sliding further to $50,000.
The breach of the psychological barrier from $60,000 to $50,000 signifies a significant shift in market sentiment, attributed by 10x Research to a diminishment in buying pressure “while selling pressure accelerates.” Analyst Markus Thielen of 10x Research believes this downtrend was foreseeable.
He stated, “Our June data already indicated the market had entered an overbought state, necessitating a correction.”
Thielen previously shared charts predicting Bitcoin breaking through consolidation ranges and heading towards $50,000, possibly forming a double top pattern.
A double top formation occurs when prices reach two similar peaks, experience a slight decline in between, and maintain support above a common line called the “neckline.” When prices drop below the neckline, this formation typically dissolves, with the decline possibly equaling the distance between the peaks and the neckline.
“As we have observed over the past three months, ranging markets are a complex stage often marked by several false breakouts,” Thielen wrote.
“Historically, topping formations tend to put retail investors at a disadvantage, with many altcoins experiencing significant declines.”
