The German Government Using Bitcoin: What You Need to Know
During the first week of July, the German government made the news multiple times, but for something you wouldn’t expect—the movement/sale of Bitcoin. This has left many individuals in the industry wondering why the German government even has Bitcoin in the first place and what we can expect from them going forward.
While we don’t have a crystal ball, we have taken a deep dive into the subject to present you with all the facts, as well as some suggestions you may want to keep in mind in the future. To learn more about the German government and Bitcoin, read on.
Why Does the German Government Have Bitcoin?
If you saw the news, your first thought was likely wondering how they got ahold of it in the first place. Although it would be nice if they believed in the cryptocurrency enough to buy into it, they actually attained most of their Bitcoin from government seizures.
The largest portion of their Bitcoin came from the seizure of a movie piracy website, amassing the government an impressive 50,000 coins at one time. This doesn’t include other cryptocurrencies they have seized over the years, meaning that at one point the government of Germany held over $600 million worth of Bitcoin.
After the most recent transactions in June 2024, it is estimated that the government still has control over 40,000+ Bitcoins, making them one of the largest holders of Bitcoin in the world.
Why Did the German Government Sell Bitcoin?
It is unclear exactly why the German government offloaded so much Bitcoin in June and July 2024. Enthusiasts watching the transactions noted that the government sent to exchange related addresses, insinuating that they likely plan to sell some of their holdings. In total, the government moved $130 million to exchange addresses.
According to official statements, the German government wishes to liquidate all of their holdings, but they have yet to do so because of the effect it would have on the market since their holdings are so significant. Instead, the government has a plan of slow liquidation, of which the June movements of $130 million worth of coins was a part of.
We just hope that whatever they make in revenue will go directly to improving the conditions of the country’s citizens and not to the lining of politician’s pockets.
It’s important to note that because of the Bitcoin ledger and the fact that all individuals are able to see all transactions, the holdings of the German government are based on wallet addresses that are known (in past seizures) to belong to the government. It is possible, however, that there are more wallet addresses that belong to them of which we are unaware of. Therefore, the numbers presented in this article are estimations based on that knowledge only.
What Other Governments Hold Crypto?
It might seem a bit sketchy that the German government holds so much cryptocurrency, but the reality is they are only the 4th largest government holder of Bitcoin—as there are many other countries which hold even more.
The top country is actually the United States Government, which holds over $13.9 billion in crypto. Much of this, similar to Germany, was seized from criminals—typically drug kingpins. Almost 90% of this cryptocurrency is in Bitcoin, though they do also have some notable Ethereum holdings.
After the US, the second largest holder is the nation of China, which holds over $12.4 billion in crypto. Like the other major countries, we can assume some of this was acquired via seizures, but it could also be purchased. Although cryptocurrency is illegal in China now, it was unregulated for several years before becoming illegal—meaning the government may have invested on its own.
Third on our list is the UK, which holds $4 billion in crypto, which is still impressive but not quite as impressive as America and China. Though they do hold more than their German neighbors across the channel.
After Germany, Ukraine is a close fifth, holding a reported 46,351 BTC, much of which came from a former corrupt government official, though some coins were sent as donations by supporters when the war broke out in 2022.
These aren’t the only countries holding BTC however, as El Salvador and Bhutan both hold significant amounts. El Salvador holds 5,779 coins, some of which the government purchased when they made Bitcoin legal tender. The Bhutan government is mining their own Bitcoin of which they currently report to hold 621 coins.
Related: Bitcoin Adoption Expands in South America
How Are These Government Sales Affecting the Crypto Market?
As we mentioned earlier, the government holdings of crypto are so substantial that a large single sell off would likely cause a crash. The good news is, the government seems to be aware of how damaging these would be and, as a result, they have a long-term plan for liquidating their position.
Unfortunately, most governments don’t want to hold crypto, both because they don’t support it and because they need the fiat to pay out the victims of said crimes. As a result, you can probably expect larger sell-offs from government addresses to occur in the coming years.
While these large sales do cause price drops, it’s important to note that most of the price drops are temporary. As Bitcoin becomes scarcer (and thus more in demand), these sales will affect the market less, though we still expect them to cause price fluctuations when they do occur.
Related: 6 Key Factors that Affect the Cryptocurrency Market
Should You Buy Bitcoin Right Now?
If you’ve been following our blog for a while, you know that we always recommend buying Bitcoin. This doesn’t change with the news of the German government’s Bitcoin offloading—we still recommend buying Bitcoin as any price dips are expected to be temporary and should help your financial bottom line in the long run.
Overall, while the choice whether or not to buy Bitcoin is ultimately up to you, it is never a bad time to do so—even if the German government is currently offloading several hundred of its seized coins.
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