- Germany transferred large amounts of BTC across accounts, causing uncertainty in the market.
- Correlation of BTC with traditional investments and asset classes declined.
The recent Bitcoin [BTC] crash has caused a surge of negative sentiment around the crypto market.
Germany makes a move
In a move with significant financial implications, the German government has transferred 700 Bitcoin on 7th July, according to blockchain data analysis firm Arkham.
The transfer, valued at roughly $40.55 million, was sent to an unmarked address, raising questions about its purpose.
While the specific reason for the transaction remains unclear, the address may be associated with a financial institution or an over-the-counter (OTC) service.
OTC services cater to large investors looking to trade large volumes of cryptocurrency outside of traditional exchanges.
This transaction comes amidst Germany’s continued holdings of a substantial amount of Bitcoin. The German government currently holds approximately 39,826 BTC, valued at around $2.31 billion.
This sizeable holding suggests a potential long-term strategy for the German government with regard to cryptocurrency.
The unmarked address associated with the transfer creates uncertainty about the purpose. Some might fear it’s a precursor to a large sell-off by the German government, leading investors to offload their holdings before the price drops further.
Source: Arkham Intelligence
Co-relation declines
Separately, the relationship between Bitcoin and traditional stock markets has weakened significantly. This means that Bitcoin’s price movements are no longer closely following the ups and downs of equities, unlike what was observed in previous years.
This decline in correlation was at its strongest in over four and a half years.
Analyst Will Clemente believes this is likely due to a unique situation where there is an excess supply of Bitcoin overhanging the market.
This supply overhang is thought to be originating from several sources, including Germany, the United States, and Mt. Gox, a now-defunct Bitcoin exchange that lost a huge number of Bitcoins years ago.
Read Bitcoin’s [BTC] Price Prediction 2024-25
The presence of excess supply is putting downward pressure on Bitcoin’s price, and this pressure is independent of what’s happening in the stock market.
Source: X
At press time, BTC was trading at $57,482.70 and its price had surged by 1.42% in the last 24 hours. Coupled with that, the volume at which BTC was trading at had declined by 47.14% during the same period.
Source: Santiment