Amid waves of concern over Bitcoin sales by the US and German governments, industry experts have come forward to allay fears, suggesting that the moves could be positive for the market.

Yesterday, the Bitcoin sector experienced increased volatility following actions by two major governments. The German Federal Criminal Police (BKA) continued to sell Bitcoin, reducing its holdings from 50,000 BTC to 45,264 BTC. At the same time, the US government transferred 4,000 BTC to Coinbase, likely for liquidation, while retaining a significant amount of 213,546 BTC in its reserves.

Why It’s Bullish for Bitcoin (Long Term)

Travis Kling, founder of Ikigai Asset Management, noticed the timing of these events. “All at the same time – US government sells seized Silk Road Bitcoins, US government sells seized BTC to Banmeet Singh, German government sells seized BTC to Movie2k, Mt Gox distributes BTC after a decade. Interesting… I can’t help but look at all these actions and wonder about some kind of coordination/underlying intent” – Kling he stated via X

Despite concerns that the sale could put pressure on Bitcoin prices, experts say the impact on the market will likely be minimal. Ki Youthful Ju, CEO of CryptoQuant, countered the prevailing fear, uncertainty, and doubt (FUD) sentiment. He noted, “The US government did not sell 4K worth of bitcoin today, but it is less likely to impact the market. Coinbase Prime handled 20-49k BTC per day in sell-side liquidity during peak ETF spot inflows and 6-15k per day during low ETF spot inflows. I’m posting this because I’m tired of the ‘government selling’ FUD,” as shared via X.

Crypto Analyst Skew (@52kskew) only if insight into how these transactions typically take place, “The U.S. government sent 3.94k BTC to Coinbase Prime to be processed by Coinbase Institutional. Typically, there are two options: OTC desks can either auction the BTC to customers (buying off-market) or auction it on the open market (selling on-market).” Skew’s explanation makes it clear that the impact on price is likely to be rather tiny.

Adam Cochran, Managing Partner at CEHV, illuminated Bitcoin’s resilience in airy of multiple bearish catalysts: “Also in the case of US Gov FUD, Mt Gox FUD, most major dumps ended, markets fell, Nvidia fell from highs, BTC had every reason to fall and is still mostly held at 60 thousand dollars . Negative news is trying to cope.”

Will the history of gold repeat itself in the case of BTC?

Echoing the historically bullish sentiment, Alistar Milne, CIO at Altana Digital, compared it to past government asset sales: “The government sale is bullish. Gordon Brown famously sold the UK’s gold reserves for less than $300 an ounce. One of the worst decisions ever made by a Chancellor of the Exchequer. Germany and America are making much worse mistakes by selling confiscated BTC now. They can only sell once.”

Government sales are bullish

Gordon Brown famously sold UK gold reserves for less than $300 an ounce. One of the worst decisions ever made by a Chancellor of the Exchequer

Germany and America are making much worse mistakes by selling seized BTC now. They can only sell once photo:twitter.com/i0rZMpuiS0

— Alistair Milne (@alistairmilne) June 26, 2024

For comparison, Gordon Brown, while serving as Chancellor of the Exchequer from 1997 to 2007, decided to sell approximately 60% of Britain’s gold reserves between 1999 and 2002. This period is called “Brown Bottom”.

The sale took place in a series of auctions at prices ranging from $256 to $296 an ounce — far below the price of gold, which rose significantly in subsequent years. The move is widely seen as a financial blunder that cost the British Treasury billions of dollars in potential revenue as gold prices rose to more than $1,500 an ounce in subsequent decades.

Moreover, there is another bullish aspect to this. The completion of these BTC sells could remove a significant excess in the market, as these sells hang over the market like the sword of Damocles; once that happens, there is a vast downside risk for the market eliminated forever, better early than behind schedule.

At the time of publication, BTC was priced at $61,117.

Featured image created with DALL E, chart from TradingView.com