Are governments about to dump crypto holdings?
investmentnews.comBitcoin trails traditional assets in August as the month draws to a close, hampered by ebbing liquidity and lingering worries that governments may sell from their stockpiles of the cryptocurrency.
The US, China, the UK and Ukraine are potential sources of such disposals, as are creditors receiving tokens from the collapsed Mt. Gox digital-asset exchange, research company Kaiko wrote in a note. That’s part of a possible $33 billion overhang of Bitcoin supply, according to the analysis.
Kaiko estimated the US administration holds about 203,220 Bitcoin, followed by China’s 190,000, the UK’s 61,200 and 46,350 for Ukraine. Governments seize tokens in criminal cases, while Ukraine is thought to have received donations to help fund its defense against Russia’s invasion. Meanwhile, Mt. Gox has roughly 46,170 of tokens left to distribute, Kaiko said.
“Supply overhang has been a topic in crypto markets throughout the summer,” Kaiko analysts Adam Morgan McCarthy and Dessislava Aubert said. There are several “prominent holders that could be potential sources of selling pressure in the coming months,” they added.
The fears of punchy sell orders come alongside a thinning of liquidity in the Bitcoin market that can amplify price swings in response to big trades. The digital asset has dropped some 8% so far this month against that backdrop, compared with gains of about 2% in global gauges of stocks and bonds.
“Spot market volumes for Bitcoin remain subdued, contributing to recent choppy price action,” Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors LLC, wrote in a note. Seasonal trends suggest activity typically picks up after Monday’s US Labor Day holiday, he added.
One of the metrics Farrell flagged is the
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