Royal Government of Bhutan extends Bitcoin sell-off with latest transfer

The Royal Government of Bhutan transferred 100 Bitcoin worth $6.77 million to  QCP Capital’s WBTC merchant deposit address (bc1qt) on Thursday. Although the motive of the transaction remains unknown, it suggests that the government is taking actionable steps to sell some of its Bitcoin holdings.

On Thursday, the Royal Government of Bhutan transferred 100 Bitcoins, worth $6.77 million, to a WBTC merchant deposit address (bc1qt). The transaction extends the government’s BTC sell-off as it manages its crypto portfolio.

Government of Bhutan transfers 100BTC to QCP, onchain data shows

The transaction suggests the government is actively managing its cryptocurrency holdings, potentially engaging in liquidity management or preparing for sales into liquid markets. The transaction does not confirm an outright sale. However, the movement of significant BTC amounts to institutional market makers like QCP Capital indicates strategic financial activity, possibly in response to falling Bitcoin prices and miner capitulation.

Onchain data shows that the government’s crypto portfolio is valued at $381.56 million, with the majority of its holdings being Bitcoin. The government holds Bitcoin worth $381.51 million, with Ethereum accounting for $49.56k and being its second-largest crypto holding.

Many countries acquire Bitcoin through seizures linked to criminal activity. However, Bhutan is among the few countries that have taken a different approach to its cryptocurrency holdings. The country has primarily acquired Bitcoin through state-sponsored crypto mining, with operations commencing in 2019. The country’s mining operations use renewable hydroelectric power as an eco-friendly energy source.

Bitcoin’s recent price decline has not favoured mining activities. A previous Cryptopolitan coverage reported that Bitcoin’s recent price decline below $70k triggered miner capitulation. According to the report, Bitcoin was trading about 20% below its estimated production cost, putting intense pressure on mining operations. 

According to data from Checkonchain, the average cost to produce one bitcoin at the time of reporting was around $87,000. The data currently shows that Bitcoin is still trading below its production price. The difficulty regression model or estimated average production price currently sits at $79.253K. 

The BTC price dip has forced miners into uncharted territory, as they capitulate to remain afloat amid unprofitability at current prices. Most Antminer S21-series machines have shut down, and miners are now forced to sell their crypto holdings to cover operating expenses and energy costs while servicing existing debt. The intense pressure on Bitcoin mining could be the inspiration behind the government’s recent BTC transfers.

Institutions exert more selling pressure on BTC as prices remain below $70K

The data from Arkham Intelligence also shows that the Royal Government of Bhutan initiated a similar transaction involving 100 Bitcoin, worth $8.31 million, to the same QCP merchant address two weeks ago. The government also transferred $1.5 million in USDT to Binance’s Hot wallet.

The Royal Government’s extension of the Bitcoin sell-off aligns with intense selling pressure from institutional-grade investors. According to data from SosoValue, institutions drew $276.30 million from US spot exchange-traded funds on February 11. These funds still hold a substantial amount of Bitcoin, equivalent to $5.76 billion or 6.35% of the asset’s total market capitalization.

Bitcoin has been under intense selling pressure since the start of the year. The crypto asset is currently trading at $67,186, after briefly touching $60,074 on Friday last week. According to CoinMarketCap data, the crypto asset is down more than 30% from its $97,860 high this year and has declined by more than 23% YTD. Bitcoin’s current price is nearly 50% below its all-time high of $126,198, recorded on October 6 last year. Experts from 10X Research reported that Bitcoin’s current downtrend could continue, as investors are not yet fully positioned to reverse it.