Markets
Government Bitcoin Sale Won’t Shake Crypto Market, Says CryptoQuant CEO
The recent sale of bitcoins by the German government has put selling pressure on crypto investors that has caused panic. This move has somewhat led to Bitcoin price drops 4.3% over the past day and more than 6.63% over the past week, pushing it below $54,000.
Perhaps CryptoQuant CEO Ki Young Ju is suggesting that government Bitcoin sales may not have as big an impact on the market as previously thought.
Minimal impact of government selling BTC
According to Ki Young Ju, about $224 billion has been injected into the Bitcoin market since the beginning of 2023. In comparison, the bitcoins seized by the government represent about $9 billion, or only 4% of the total realized during this period. This challenges the idea that government-held bitcoins have a significant impact on market liquidity.
At the same time, Ju emphasizes the importance of realized market capitalization, which differs from traditional market capitalization. As market capitalization multiplies Current Bitcoin Price by its total supply, the realized cap is calculated based on the last price at which each Bitcoin moved.
However, according to Ju, the realized cap reflects the total value of on-chain transactions, often described as a “graveyard of exit liquidity victims.” It reflects the capital accumulated as profits are realized and trades are executed. A higher realized cap suggests stronger fundamental support for asset prices, especially in speculative markets like Bitcoin.
Bitcoin ETF Inflows Increase
CryptoQuant CEO suggests that despite concerns about government Bitcoin sales, the market continues to be strong with a substantial influx of new capital. This influx of capital supports Bitcoin prices, which could help stabilize the market during periods of volatility.
Recently, SpotOnChain, a popular analytics firm, reported that Bitcoin ETFs saw net inflows exceeding $143 million on July 5.
According to their data, Grayscale’s ETF (GBTC) saw $28 million in outflows on the same day. Fidelity’s ETF (FBTC) led with $117 million in investments, followed by Bitwise Bitcoin ETF (BITB) with $30 million in inflows. However, some exchange-traded funds saw no inflows during this period.