Saxony fuels Bitcoin crash
The Bitcoin seems to know only one direction: down. The cryptocurrency has significantly moved away from its all-time high. At the beginning of the week, it continues to lose value, having gone down almost 20% since early June. The Bitcoin has moved far away from the March record high of around 73,800 US-Dollars, currently worth approximately 55,700 Dollars. One of the main reasons for the decline: Saxony.
Saxony's Criminal Police Office seized around 50,000 Bitcoins in the course of investigations against the illegal film exchange platform Movie2k.to in January. One of the suspects voluntarily transferred the digital coins, according to the General Prosecutor's Office Dresden. The authorities are now reportedly selling the assets. The volume is significant - approximately 2.6 billion Euro based on current value.
Sales in such large quantities could lead to an oversupply and further pressure on the price. In addition, law enforcement agencies in Europe and the US are reportedly in possession of large Bitcoin holdings seized from criminals, which they intend to sell.
"Panic mode"
Pressure on the cryptocurrency also comes from another direction. Ten years ago, the once largest Bitcoin exchange Mt. Gox collapsed. Around 850,000 Bitcoins were lost. So far, 142,000 of these have been recovered and are now to be returned to the owners.
It is unclear what these investors will do with their Bitcoins. At the time of the bankruptcy, the cryptocurrency was only worth a few hundred dollars. It is therefore quite likely that at least some investors will throw their Bitcoins onto the market in large quantities. "If crypto-assets are thrown onto the market in significant volumes in the foreseeable future, this could at least temporarily cause a supply surplus," says Timo Emden from Emden Research. "The transfers of Bitcoin to the old owners alone are already sufficient to cause investors to panic."
The ongoing selling of seized Bitcoins by authorities and potential massive sales from early Mt. Gox investors could lead to an oversupply in the Bitcoin market, putting additional pressure on its price and potentially causing panic among investors. The significant volume of Bitcoin sales could lead to a temporary supply surplus, further influencing the economy of cryptocurrencies.
