Germany sends more Bitcoin to exchanges as $550M selloff deepens

German government wallets sent another tranche of Bitcoin to Kraken and Coinbase on July 6, extending a liquidation campaign that has already unloaded 10,000 BTC worth $550 million since mid-June.

Bitcoin fell 11% to $53,513 since July 1 as wallets linked to Germany's Federal Criminal Police Office transferred seized BTC to Kraken and Coinbase, Arkham Intelligence data shows.

"The consistent outflows to exchanges in July suggest the impact could be felt in the near term," analysts at QCP Capital wrote, noting that the German government still holds more than 42,000 BTC worth about $2.3 billion.

The latest transfers follow a pattern of state-level liquidation that has weighed on Bitcoin since mid-June. Germany has already sold 10,000 BTC from the 50,000 coins seized in January from the movie piracy operation Moview2k. The selling coincides with Mt. Gox repayments — the defunct exchange moved 47,000 BTC on July 5 as part of a plan to return 140,000 BTC to creditors. BTC longs worth more than $210 million were liquidated across exchanges on July 4 and 5, Coinglass data shows.

The selling pressure comes as Germany also considers ending its crypto tax exemption after a one-year holding period, a measure listed in the 2027 federal budget consolidation plan. The coalition government agreed on structural savings of roughly 4 billion euros per year, with crypto tax changes part of a broader revenue package. If approved by the Bundestag, Germany would join Austria in scrapping the holding-period exemption, potentially reshaping how crypto is taxed in Europe's largest economy.

Why Government Wallets Move Differently

A government liquidation wallet is not a random whale transfer. When a state entity sends BTC to exchanges, traders assume the coins are heading toward sale rather than custody reshuffling. The destinations — Coinbase, Kraken, Bitstamp — are deep-liquidity venues that can process large flows with minimal market disruption, but the directional signal is clear.

The BKA-linked wallet has become one of the most watched addresses in crypto this week. Exchange inflows alone do not confirm a sale, but they tighten the window between potential supply and market impact. Bitcoin's resilience now depends on absorption: whether ETF demand, spot buyers, and market makers can take the supply without a sharper move lower.

A Broader European Tax Shift

The selloff is unfolding against a regulatory backdrop that could make Germany less hospitable to long-term Bitcoin holders. The Federal Ministry of Finance's monthly report listed an adjustment of cryptocurrency taxation among consolidation measures for the 2027 budget. Under current law, gains become tax-free after 12 months under Section 23 of the Income Tax Act, while sales within a year face personal income tax rates of up to 45%.

The SPD's Seeheimer Kreis has called for uniform capital gains taxation regardless of holding period. Industry groups have pushed back — Bundesverband board member Matthias Steger warned that taxing every disposal would turn everyday payments into tax events and push firms to friendlier jurisdictions such as Portugal, the only other EU member state with a full one-year exemption. Austria scrapped its holding period in 2022 and now taxes crypto gains at a flat 27.5%.

Whether the exemption survives will become clearer once the Bundestag reviews the draft. With one in four European investors holding cryptocurrency and new reporting rules under CARF and DAC8 already in force, Germany's decision could influence the debate in Brussels and beyond.

This article is for informational purposes only and does not constitute investment advice.