Government Bitcoin Sell-Off Won’t Shake Crypto Market Say CryptoQuant’s CEO
Mustafa Mulla6 Jul 20242 min read
Recent, selling of sized bitcoin by the German government has exerted selling pressure that triggered panic among crypto investors. This move has somewhat resulted in Bitcoin’s price dropping by 4.3% in the past day and over 6.63% in the past week, pushing it below the $54,000 mark.
Perhaps, CryptoQuant CEO Ki Young Ju suggests that government Bitcoin sales may not have as significant an impact on the market as previously thought.
Minimal Impact Of Government Selling BTC
According to Ki Young Ju, around $224 billion has flowed into the Bitcoin market since early 2023. In comparison, government-seized Bitcoin amounts to about $9 billion, accounting for only 4% of the total realized cap in this period. This challenges the idea that government-held Bitcoin significantly impacts market liquidity.
Meanwhile, Ju highlights the importance of the realized cap, which differs from the traditional market cap. While market cap multiplies Bitcoin’s current price by its total supply, the realized cap is calculated based on the last price at which each Bitcoin moved.
However, the realized cap, according to Ju, reflects the total value of on-chain trades, 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, particularly in speculative markets like Bitcoin.
Bitcoin ETF Inflows Surge
CryptoQuant’s CEO suggests that despite worries over government Bitcoin sales, the market continues to be strong with substantial new capital flowing in. 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) experienced outflows of $28 million on the same day. The Fidelity ETF (FBTC) led with $117 million in investments, followed by the Bitwise Bitcoin ETF (BITB) with $30 million in inflows. However, certain exchange-traded funds recorded zero flows during this period.
