Government Bitcoin Holdings Strategy: Its Actual Impact on the Market Is Limited

3-Point Summary

• Most government-held Bitcoin comes from seized or confiscated assets, not strategic accumulation.
• Major countries like the U.S., China, and the U.K. have little incentive to hold Bitcoin long-term and frequently liquidate it.
• The market is increasingly driven by ETFs, institutional capital, and global liquidity rather than government selling.

Most government-held Bitcoin comes from seizures, and the market is now driven more by ETFs, institutions, and liquidity than by government actions.

Government Bitcoin Strategy: Holdings Structure, Custody Methods, and Future Direction

In the global market, provocative claims such as “China is accumulating 1 million BTC” have been spreading rapidly. However, when we look at actual data, the amount of Bitcoin held by governments and their strategies differ greatly from these rumors. Government Bitcoin strategies are an important variable that reflect not only simple holding or selling decisions, but also national economic policy, regulatory direction, and geopolitical interests.

This article organizes the structure of government Bitcoin holdings, their custody methods, and their future strategic direction from three main perspectives.

1. Bitcoin (BTC) holdings by governments and how they acquired them

There are three main ways in which governments come to hold Bitcoin.

1) Seized and confiscated assets

Most governments do not purchase Bitcoin directly. Assets seized in criminal, hacking, and money laundering cases account for the majority of government Bitcoin holdings.

Representative cases:
- United States: Large-scale seizures from Silk Road, Bitfinex hacking cases, etc.
- China: PlusToken Ponzi scheme
- United Kingdom, Australia, South Korea: Seized criminal assets later held or liquidated

2) Strategic national purchases

Some countries strategically acquire Bitcoin, treating it similarly to foreign exchange reserves.

Representative cases:
- El Salvador: Continuous purchases after adopting Bitcoin as legal tender
- Bhutan: Direct mining and acquisition by the national investment authority

3) State-sponsored hacking (estimated)

North Korea, unlike most other countries, is believed to have acquired Bitcoin through state-level hacking operations. Many analyses suggest that, under international sanctions, it has used digital assets as a means of securing foreign currency.

2. BTC holdings by country (as of 2025–2026)

Country	Holdings (BTC)	Share of total supply
United States	Approx. 329,000 BTC	Approx. 1.57%
China	Approx. 190,000 BTC	Approx. 0.90%
United Kingdom	Approx. 61,000 BTC	0.29%
North Korea	Approx. 13,500 BTC	0.06%
Bhutan	Approx. 10,700 BTC	0.05%
El Salvador	Approx. 7,400 BTC	0.03%

The key point is that most governments hold Bitcoin not as an “investment” but as “seized assets.”

3. How do governments store their Bitcoin?

Government Bitcoin custody is far more strict and structured than that of typical individual investors.

1) Cold wallets

Bitcoin is stored on devices completely disconnected from the internet, minimizing hacking risk. Most use multi-signature (multi-sig) structures, where multiple agencies each hold part of the keys.

2) Digital vaults at central banks or state treasuries

Some countries treat Bitcoin like gold or foreign reserves. In such cases, the central bank manages it directly, with security standards comparable to national security infrastructure, both physically and digitally.

3) Seized asset management systems

Countries such as the United States, China, and the United Kingdom primarily use this model. Before court rulings, law enforcement or justice ministries manage the assets; after rulings, the Bitcoin is either liquidated or transferred into the national treasury.

4. What strategies will governments choose going forward?

New dynamics between selling and strategic holding

Some frame the situation as a simple “selling governments vs holding governments” dichotomy, but the reality is more complex. Depending on each country’s economic structure and policy philosophy, three main strategic directions emerge.

1) Seized-asset liquidation focused countries

In countries like the United States, China, and the United Kingdom, where most holdings come from seizures, there is little incentive to hold Bitcoin long term. These governments are likely to continue selling over time.

2) Strategic holding countries

Countries such as El Salvador and Bhutan, which treat Bitcoin like a reserve asset, are more likely to increase their holdings over the long term.

3) Policy-neutral countries

Jurisdictions like Singapore, Hong Kong, and the UAE pursue crypto-friendly policies and build market infrastructure, but do not necessarily buy BTC at the sovereign level.

Going forward, the landscape is likely to evolve in diverse ways depending on each country’s economic strategy, rather than splitting neatly into simple “buyers vs sellers.”

5. How government selling affects ETFs and institutional investors

Government Bitcoin sales can be a short-term headwind, but they may also create opportunities for ETFs and institutional investors.

1) Short-term impact

Large-scale sales increase price volatility. Since ETFs continuously buy and sell based on real-time demand and supply, this can lead to short-term net outflows from Bitcoin ETFs.

2) Medium-term impact

Although announcements of government sales often trigger short-term price drops, historical patterns show that prices frequently recover quickly after the actual sales. Institutions tend to use these dips as buying opportunities.

3) Long-term impact

As government-held Bitcoin is gradually released into the market, circulating supply becomes more dispersed, reducing the influence of any single government and improving long-term market stability and institutional confidence.

Conclusion

Government Bitcoin strategies can be grouped into seized-asset liquidation, strategic holding, and policy neutrality. However, major countries such as the United States, China, and the United Kingdom are highly unlikely to hold Bitcoin long term or to accumulate significantly more. Most of their holdings are seized assets that are periodically liquidated through legal processes.

As a result, the influence of government-held Bitcoin on market prices is gradually diminishing. Going forward, Bitcoin’s market trajectory is likely to be driven far more by ETF demand, institutional capital inflows, and global liquidity conditions than by government selling.

Younchan Jung
Researcher exploring structural shifts in AI, blockchain, and the on‑chain economy.

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