Howdy, crypto enthusiasts, cent, inleo and hive community!
Today, I want to tell you about something that has recently become the talk of the town in the cryptocurrency world: Germany’s decision to dispose of a portion of its Bitcoin holdings. It is important because it could reshape the market and I’m here to elaborate on it.
Firstly, let us look at the figures.
Germany currently holds around 39,826 Bitcoins which by today’s prices amounts to an incredible $2.2 billion. This is no joke! Since mid-June, they have persistently sold these Bitcoins with over 10,000 gone already thus this selling spree represents a considerable chunk of Bitcoin’s daily trading volume i.e., approximately 9%.
Now why should we care?
Well, when governments or any other big body decides to sell a large amount of Bitcoin, this can cause some disturbance in the market. We saw this happening lately. Over four weeks Bitcoin has fallen by about twenty percent, and within seven days alone there has been a dip that can be noticed, at least a thirteen percent drop in price as well as volume. That isn’t just a minor correction; rather it is an enormous move for anybody who owns or trades Bitcoin.
Germany’s strategy is not well-received among certain individuals in the crypto community. They argue that selling off Bitcoin for fiat currency, which can be printed indefinitely, would have been a poor strategic move. Fiat differs from Bitcoin in one area:
Only 21 million Bitcoins will be produced.
This limited number of units makes Bitcoin precious and preferable to investors who do not want traditional currencies.
Here is how:
You have a rare baseball card that only a few people have. The value of it depends on its scarcity and demand from collectors. But if one of those collectors suddenly brings into the market other cards like that, your card might lose value. Something similar is happening with Bitcoin lately. Germany is increasing supply through sell-off which may decrease prices momentarily.
Although it sounds like all is lost, there’s a light at the end of the tunnel. There is some positive side to it, though. This presents an opportunity for some smart minds in the cryptocurrency space. There has been a drop in Bitcoin prices recently which means you can buy at a discount unlike weeks ago before now and this could be your chance of acquiring some digital gold before the price soars.
Buy the dip as we call it.
So what do we learn from this?
Germany’s move to sell its Bitcoin holdings serves as a reminder of the volatility of cryptocurrencies. The actions by big players such as governments or major investors can cause prices to fluctuate wildly. If you are considering investing or have already put money into it, make sure that you keep yourself updated with information on what influences the cost of Bitcoin.
