- Germany recently moved a large portion of its Bitcoin in recent days.
- Daily activity on the Bitcoin network also grew significantly.
Optimism around Bitcoin [BTC] rose in recent days as prices returned to the $59,000 level. However, recent measures by the German government may lead to cynicism among holders.
What is Germany doing?
Over the past 24 hours, there has been significant activity in the German government’s cryptocurrency wallet. The wallet transferred 6,307 Bitcoins, worth approximately $362.1 million.
However, it also received 2,810 BTC, which amounts to $161.6 million. This suggests that the German government may have been in the process of selling off some of its Bitcoin holdings.
The net difference translated into a potential sale of 3,497 BTC, worth approximately $200.5 million. After these transactions, the German government was left with 23,964 BTC, worth approximately $1.38 billion.
Selling a significant amount can put additional selling pressure on the market, potentially leading to a temporary dip. This effect could be amplified if the market is already bearish and reacts negatively to the news.
However, the impact can be mitigated by several factors. If the government sells gradually, it can minimize the immediate price drop.
A strong overall market with a lot of buying activity can easily absorb the additional supply.
It’s also worth noting that the market may already have priced in some of this impact, given Germany’s previous large sale of seized BTC in June.
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Will the bulls bleed?
Analyst Ki Young Ju highlighted the lack of a long-term push in the current Bitcoin cycle. In a long squeeze, a sudden drop in price forces long holders to sell, potentially accelerating the decline.
To estimate the possibility of a long squeeze, analysts use the long/short squeeze ratio. This ratio, calculated as hourly liquidation volume divided by total taker volume, indicated an imbalance between long and short positions.
While Bitcoin witnessed short squeezes of nearly $66,000 this year as short sellers were liquidated and squeezed out, the previous cycle saw four long squeezes around $55,000.
Ki Young Ju’s observation suggested that the current cycle could be ripe for a long-term squeeze, potentially impacting Bitcoin’s price movement.
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Read Bitcoin’s [BTC] Price forecast 2024-2025
Daily activity for Bitcoin is increasing
At the time of writing, BTC was trading at $58,989.30 and the price was up 2.97% in the past 24 hours.
The number of daily active addresses on the Bitcoin network has grown significantly in recent days, indicating that interest in Bitcoin’s ecosystem has also grown along with the price of BTC.
Source: Santiment