U.S. Government’s BTC Holdings Plunge 90% — What Does This Mean for the Crypto Market?
On July 16, independent journalist L0la L33tz revealed a bombshell: the U.S. Marshals Service (USMS), under the Department of Justice, currently holds only about 28,988 BTC — worth approximately $3.44 billion at current prices. This figure represents a nearly 90% drop from the widely expected government BTC stash of 200,000 coins, immediately triggering a wave of speculation over whether the U.S. government has been secretly selling Bitcoin.
This document, disclosed through a Freedom of Information Act (FOIA) request, turned Trump’s Bitcoin reserve strategy from an “inspirational shōnen story” into a “crypto suspense thriller,” plunging the crypto community into a frenzy of theories and speculation.
28,988 BTC vs. 200,000 BTC: The Questions Behind the Numbers
For a long time, the market consensus was that the U.S. government had accumulated a massive BTC reserve through law enforcement seizures and forfeitures. For example, on-chain analytics firm Arkham Intelligence once estimated the total value of U.S. government crypto holdings at around $25 billion. But now, FOIA data reveals only under 30,000 BTC, leading many investors to wonder:
Has the U.S. government been secretly selling off large amounts of BTC in recent months?
Is this related to the recent price volatility of Bitcoin?
It’s worth noting that the U.S. Marshals Service (USMS) is only responsible for disposing of assets that have been formally seized. Assets still under legal proceedings may remain with other agencies like the FBI or IRS. So this FOIA data may not reflect the entirety of the U.S. government’s BTC holdings.
Still, the number is shocking — and it raises concerns that the U.S. government might have sold off significant amounts of Bitcoin via OTC channels to avoid triggering price shocks on public markets.
“On-Chain Tracking Failure”: Is the U.S. Government Selling BTC Off-Chain?
At first, many people took a “let’s follow the money” approach, expecting to find transaction traces on-chain. But this time, blockchain data seems to be failing us — adding another layer of mystery to the story.
Bitcoin Magazine CEO David Bailey pointed out: “Chasing on-chain transactions might be meaningless — if the deals were conducted off-chain via custodians, there would be no footprint.”
Crypto analyst Sani (@SaniExp) went a step further, speculating that custodial giants like Coinbase may be helping the government perform “off-chain swaps,” moving BTC internally to institutional buyers instead of selling it directly on-chain.
If that’s true, it means the market has been staring at a “false mirror” — while the real BTC movement has quietly taken place behind the scenes.
Revisiting Trump’s Strategic Bitcoin Reserve Plan
Trump’s executive order required all federal agencies to transfer seized BTC and other digital assets to the Treasury, establishing a “Strategic Bitcoin Reserve” for long-term asset management. Trump himself stressed that the U.S. should “accumulate Bitcoin,” not dump it on the open market.
And now, just months later, has that plan been completely undermined?
U.S. Senator Cynthia Lummis took to X to voice her anger: “If this is true, the U.S. may have sold more than 80% of its Bitcoin holdings. That is a strategic blunder that could set America back years in the Bitcoin race.”
Will this pressure Trump politically? Could it even force the White House to consider “buying back BTC” to restore the strategic reserve? That’s what the market will be watching closely.
Two Camps Emerging: Market Reaction Split
- The Bearish View:
A large-scale BTC selloff by the government could signal a lack of confidence in Bitcoin.
The selling pressure may have contributed to Bitcoin’s recent price correction (from its $123,000 high).
Fear and uncertainty could spread, prompting retail investors to exit or wait on the sidelines. - The Bullish View:
If the selloff already happened, then the market has absorbed the pressure — paving the way for future price increases.
The BTC may now be in the hands of “diamond hands” like institutions and ETFs with long-term horizons.
If the U.S. government wants to re-accumulate BTC, it may push prices even higher.
From a trader’s perspective, this incident looks more like a “chip redistribution” — with government-held assets quietly shifting to institutional players via OTC deals.
Global Implications: It Might Not Be That Bad
We can’t say with 100% certainty that this represents the full picture of the U.S. government’s Bitcoin holdings, and the situation is far from concluded. But if we zoom out and look at the broader global landscape, this might not be such bad news:
The Exit of a Major Seller:
If the U.S. government has really reduced its BTC holdings, it means one of the largest potential sellers has exited. That could actually be healthy for the market, as the looming sell pressure gets removed.
A Buying Opportunity for Other Nations:
Countries like El Salvador and the UAE have already declared Bitcoin as a strategic asset. If the U.S. cuts back its position, others might take the opportunity to buy and boost their standing in the “digital gold” race.
Signal to Institutional Investors:
This reinforces Bitcoin’s scarcity. If governments start to rebuild reserves in the future, BTC liquidity will tighten even more, and its price elasticity will grow significantly.
Conclusion
This FOIA disclosure didn’t just reveal the U.S. government’s Bitcoin stash — it also exposed the complexity of behind-the-scenes maneuvering. Whether it’s OTC selling or off-chain swaps, it proves that Bitcoin is no longer just a game for retail traders and tech geeks — it’s now part of a high-stakes geopolitical and capital power play.
As ETFs expand, pensions enter the space, and sovereign wealth strategies evolve, Bitcoin’s price volatility will increasingly reflect global political and financial chess games. For everyday investors, this is both a challenge — and an opportunity.
