Recent activity by the US Government involving the sale of Bitcoin has had a notable impact on investors, particularly due to the disposal of cryptocurrencies acquired from the Bitfinex hack. A significant question arises regarding the amount of cryptocurrency owned by the US, considering its effect on market dynamics.
Origin of US Government Crypto Holdings
Cryptocurrencies have not been actively purchased by the US Government but rather amassed through asset seizures linked to criminal activities. With advancements in blockchain analytics and an uptick in skilled investigators, the government has started to trace and captivate assets tied to past illegal operations, exemplified by seizures from the infamous Bitfinex and Silkroad cases, with a notable confiscation on May 11, 2020, valued at around 1 billion dollars.
US Crypto Reserves Inventory
The US Government’s current cryptocurrency reserves stand at an estimated $13.4 billion. This cache includes a significant portion from the Bitfinex and Silkroad busts, totaling nearly 1% of Bitcoin’s entire supply, dwarfing the holdings of major entities such as BlackRock. Detailed analytics reveal the government also possesses a substantial amount of Ethereum and other cryptocurrencies.
Government wallets are experiencing profitability, with holding gains nearing $6.5 billion, a stark contrast to the $3.5 billion losses during 2022’s bear market. Recent profits amount to $1.35 billion since February 23. While the latest asset moves didn’t trigger widespread alarm, there is concern that rapid selling could incite market panic, overwhelming supply levels comparable to the BlackRock reserves.
As the US Government maneuvers within the cryptocurrency landscape, its potential selling strategies and the timing thereof could significantly influence market sentiment and price stability, especially considering its sizable Bitcoin and Ethereum holdings.