Joana Cotar, a member of the German parliament and a supporter of Bitcoin, recently made a plea to the government to stop selling off its Bitcoin holdings. The continuous selling of Bitcoin by the government has had a negative impact on the price of the asset, leading to a gradual decline in June and a significant one-day drop to below $54,000 on July 5. Just two days earlier, Bitcoin’s price was above $60,000. On July 4, the German government’s wallet, labeled “German Government (BKA),” transferred $172 million worth of Bitcoin.
While the German government’s selling of Bitcoin played a role in the price drop, it was not the only factor. Another significant reason for the decline was Mt. Gox beginning its repayment process to creditors on July 4.
Cotar highlighted several reasons why she believes the government should hold onto its Bitcoin rather than selling it. She argued that keeping Bitcoin in the government’s reserves would help diversify its holdings, provide a hedge against inflation and currency devaluation, and promote the legitimacy of cryptocurrencies in the country, ultimately fostering innovation.
In a social media post, Cotar invited three other legislators to attend a lecture titled “Bitcoin Strategies for Nation States” in October 2024 to educate them on the importance of the largest cryptocurrency. The translated version of her post emphasized the need to hold Bitcoin as a strategic reserve currency, similar to discussions in the US, rather than selling it off.
Germany has only sold less than 20% of the Bitcoin it holds, which was reportedly seized from the piracy website Movie2K. It remains unclear whether the government will sell off the rest of its holdings, but it is a possibility. Justin Sun, the founder of Tron, expressed interest in purchasing the entire Bitcoin stash off-market to prevent further drops in its value.
The debate over whether governments should hold or sell Bitcoin as part of their reserves continues to be a topic of discussion. While selling Bitcoin may provide short-term financial gains, holding onto it could offer long-term benefits in terms of diversification, inflation protection, and fostering innovation in the cryptocurrency space. It will be interesting to see how the German government responds to Cotar’s plea and whether other nations will follow suit in holding onto their Bitcoin reserves.
