Germany’s 50,000 BTC dump at the bull run start is baffling, especially since they can print fiat. This, along with poor energy policies and free speech disregard, shows why Bitcoin offers hope for a better world.
Matthew Kratter
Jul 18, 2024July 18, 20246 min read6 minutes read
Bitcoin University
Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.
For those of you who don’t know what the Brown Bottom is, this was a period from 1999 to 2002 when Gordon Brown, the Chancellor of the Exchequer for the U.K. at the time, sold off half of the U.K.'s gold reserves in one of the greatest blunders of all time.
The selling occurred from 1999 to 2002, marking the bottom of a multi-decade bear market in gold. This chart is priced in U.S. dollars, but we’d see a similar trend if we looked at British pounds.
TradingView
This was a colossal blunder, and Germany made a similar mistake by selling off its 50,000 Bitcoin.
Checkmate has a great post that I want to highlight to remind people how markets work and how they front-run news. It’s a “sell the rumor, buy the news” type of market price dynamic.
The German government sold a total of $3 billion worth of Bitcoin over one month, most of it sold over the last eight days, ending approximately last Friday. The market front-ran the news, selling off to $54k, but actually rallied through multiple $400 million to $682 million market sell-off days, absorbing like a champion.
This chart shows this well.
Glassnode
The blue line represents the German government’s balance of Bitcoin at a certain address. It began to move in mid-June, presumably being sent to exchanges to be sold for euros. The market noted this and sold off in anticipation. Then, when the actual large sales started happening, Bitcoin rallied back up.
This is why it’s important not to sell the actual news when it happens; you have to sell the rumor and buy the news.
HODLing your Bitcoin is easier than trying to trade through these events.
Why the quick dump of Bitcoin?
They did a poor job and had a lot of slippage. Was it because some government official had to get it done before heading off to vacation last weekend?
Why are governments like Germany so incompetent that they don’t understand basic trading facts like slippage?
Many people have said this is a bad way of pushing down Bitcoin prices because it didn’t last long, and the market absorbed it.
This raises the question: where did Germany get 50,000 Bitcoin?
According to the news, these 50,000 Bitcoin were seized from the pirated content streaming platform movie2k.to in mid-January. Two main operators were accused in August 2020 of distributing illegal film copies between 2008 and May 2013.
They operated an illegal streaming service on Romanian servers and started buying Bitcoin with the proceeds by mid-2012.
The news says that in early 2020, the site’s programmer handed over €25 million worth of Bitcoin to authorities as compensation for damages after being in custody since 2019. The value of 50,000 Bitcoin in May 2013, when Movie2k shut down, was about $6.45 million, using the price of Bitcoin at approximately $129 per Bitcoin.
Did these guys really HODL from $6.45 million to $2 or $3 billion?
If true, they’re absolute legends.
However, there’s a chance we’re not seeing the whole story, and this might also involve laundered government intelligence money somehow ending up in German government hands and being converted to Euros.
We can see here that there’s still some Bitcoin sitting at that address because people have been sending Bitcoin there and trying to get it.
This address once had 420 Bitcoin, likely for 420 memes. The Bitcoin balance went from $3 billion to zero now. If you own 700,000 sats or more Bitcoin, you own more than Germany.
It’s hard to imagine exchanging precious Bitcoin for fiat money like euros, especially when you can print up fiat for free. This makes about as much sense as turning off your nuclear energy during an energy crisis.
In April 2023, Germany began shutting down its last three remaining nuclear power plants after a rough winter and the Nord Stream pipeline issues.
Germany has been trying to transition from wind and solar power to virtue signal, which is not a wise idea, especially since Germany is not particularly sunny or windy compared to places like Scotland.
If you’re an American, you might forget how high Germany’s latitude is. It’s right here on the map, and if you’ve ever spent fall and winter in places like Wyoming, Montana, or Canada, you know what this weather can be like. Moving from hydrocarbons and nuclear to solar and wind is probably not the best idea.
The result is that Germans, especially in the winter of 2022, returned to burning wood in their fireplaces and reopening shut-down fireplaces to heat their homes due to a lack of natural gas and the closure of nuclear power plants.
If you care about the carbon impact of moving from nuclear and natural gas to burning wood in fireplaces, it’s not good. The irony is that Germany, of all modern developed nations, should understand the importance of sound money, thanks to its history.
It’s been only 100 years since the hyperinflation in the Weimar Republic, which led to people carrying wheelbarrows of money to buy a loaf of bread. This was a central bank and government mismanagement at its best, just like Germany selling off 50,000 Bitcoins going into the Bitcoin revolution.
As an American who values free speech, it’s hard to take a country seriously that invades houses over hateful social media posts rather than protecting people in real life.
Why have Western nations like the EU, Canada, Australia, New Zealand, and even the U.S., to a lesser extent, given up hope?
Why so much self-hatred and bad policy?
Why are these countries de-industrializing like Germany, moving from hydrocarbons and nuclear to burning wood in fireplaces?
The answer for many of these countries is a return to hope; Bitcoin is one path to that hope. Bitcoin is hope for a world without hope and faith in itself.
Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.
Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers.
Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective.
In late 2019, after finally recognizing Bitcoin’s importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin.
Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site.
In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs.
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