"Dumping" countdown: 61,000 BTC about to sell, why is it much scarier than "Mt. Gox"?

Written by: Oliver, Mars Finance

“The K-line in recent days shows a decline with volume and an increase without volume, which indicates that someone is actively dumping goods.”

On November 18, this comment circulating on platform X accurately captured the common feelings of all traders recently. The market has fallen into a bizarre state of “depression,” where every rebound seems “feeble,” as if an invisible hand is continuously and mechanically selling off.

The market is in panic over the specter of “Mt. Gox”, but they are likely pointing the finger at the wrong “whale”.

A latest in-depth report based on the November court documents reveals a more structural source of selling pressure that has been overlooked by the market: the UK government.

In the case of “Crypto Queen” Qian Zhimin, UK authorities have successfully seized and controlled over 61,000 bitcoins. Now, all evidence suggests that the UK government is actively preparing to “liquidate” this asset, motivated not by “value investing,” but to fill its multi-billion-pound “fiscal gap.”

Unlike the group of “HODLers” creditors in “Mentougou”, a rational, profit-oriented “national-level whale” holding 61,000 BTC is about to become a long-term market “resistance level”.

Intent confirmation: The UK is “bidding” for monetization

Regarding the fate of these 61,000 BTC, the market once had a “romantic” fantasy.

Industry groups and commentators have publicly called for the UK government to follow the example of El Salvador and include this batch of “digital gold” in its “national strategic reserves.”

However, the UK Treasury has explicitly rejected this proposal, citing “concerns about volatility.”

The intention of the British government is very clear: to sell.

They are not just talking. Reports have revealed that the UK Home Office has issued a formal tender worth up to £40 million to £60 million through its commercial service agency BlueLight Commercial.

The purpose of this tender is to seek the establishment of a “cryptocurrency storage and monetization framework.”

The language in the bidding documents is straightforward, seeking a “SaaS-based custody and trading service” for the “realisation” of seized assets.

All speculation can come to an end. Liquidation is the only path that will be executed.

Motivation analysis: £5 billion “fiscal gap”

Why is the UK government so eager to sell?

The answer is simple: they need money.

Analysis points out that the UK government is facing a huge “fiscal gap” of £5 billion to £20 billion. Chancellor Rachel Reeves is “closely monitoring” this “windfall.”

The 61,000 bitcoins, which were seized in 2018, were worth only about £300 million at the time, but now their value has soared to around £5 billion to £5.5 billion.

This unexpected windfall has become a highly tempting direct source to fill the budget deficit.

What is even more “ingenious” is that the UK government seems to have found a legal path for the “legal appropriation” of this enormous value increase. The core point of contention in this case is that the UK Crown Prosecution Service (DPP) has proposed a “custom compensation plan” to the High Court.

The plan is highly likely to rule that the 128,000 Chinese victims are only entitled to recover their “original fiat currency losses from 2018” (approximately £640 million).

This means that the UK Treasury will legally “retain” more than £4.5 billion in “capital gains.”

Under such a strong “financial incentive,” the UK government has firmly decided to “sell” this batch of Bitcoin at a high price in an orderly manner.

Core comparison: Why is it much scarier than “Mentougou”?

The mainstream narrative in the market right now is that “the selling pressure from Mt. Gox has been digested.” However, market analysts warn that equating the UK government's sell-off with Mt. Gox is completely erroneous.

The market dynamics of the two are completely different:

1. Mt. Gox ( Mentougou ):

Assets: Approximately 142,000 Bitcoins.

Recipient: Long-term creditor.

Motivation: These creditors are “believers” who have gone through a decade-long legal battle. They ultimately chose to receive compensation in Bitcoin (rather than yen). They are ideologically consistent “HODLers” (long-term holders).

Market Impact (Forecast): Low. Analysts generally expect that only “a small portion” of creditors will sell immediately. The market is very capable of absorbing this “marginal” selling pressure.

2. UKGov ( Qian Zhimin Case ):

Assets: Approximately 61,000 Bitcoins.

Seller: The UK Government (HM Treasury/Home Office).

Motive: Financial needs (to fill budget gaps).

Market Impact (Forecast): High (Sustained). This constitutes pure, inorganic sell pressure.

The Bitcoin of “Mentougou” is transferred from one “cold wallet” to another group of “cold wallets”. In contrast, the Bitcoin of the UK government is directly transferred from one “cold wallet” to the “exchange hot wallet”, with the sole purpose of “converting to fiat currency”.

German precedent: 50,000 BTC “stress test”

How will the UK government sell? They will not “stupidly” replicate the inefficient model of the U.S. Marshals Service (USMS) of “public auctions” from 2014-2015.

Reports have pointed out a closer and more likely template: the German government will sell 50,000 bitcoins in 2024.

The German government adopted a more modern approach at the time, selling this large sum in batches through mainstream exchanges like Kraken and Coinbase, as well as over-the-counter (OTC) market makers.

Its market impact is immediate. The report states that this move caused “tremendous” and “violent” selling pressure in the short term, severely shaking the market.

But in the end, the market successfully absorbed this supply.

Germany's precedent proves two things:

The market has the capacity to absorb the supply of 50,000 to 60,000 bitcoins.

The digestive process will be extremely painful and accompanied by severe fluctuations.

Conclusion: It's not a “flash crash,” but a “pressure cap.”

Now we can answer the question that has been circulating on platform X: “Which big brother is so powerful that he can sell for so long?”

The answer is: the UK Treasury.

For the market, the core question - “Will it crash?” - has a clear answer:

It will not be a catastrophic “flash crash.” The UK government's “monetization framework” tender has suggested that this is a professional, long-term (potentially lasting 3-4 years) controlled liquidation aimed at “maximizing fiat currency returns.”

But it will be a “long-term resistance level.”

The market must digest a fact: a major Western government (the UK) is about to become a rational, profit-oriented large seller with 61,000 bitcoins.

This “inorganic selling pressure” will act like a “ceiling”, continuously suppressing the market's upward space in the coming years. During each rebound, traders must estimate: “How much will the UK government sell today?” - until all 61,000 bitcoins are absorbed by the market.