In an exciting development that reflects the complexity of the relationship between governments and cryptocurrencies, a new report from CoinGecko revealed that government accounts currently hold only 2.3% of the total circulating Bitcoin supply in the market. This means their total holdings amount to about 463,741 Bitcoins, a significant decrease from 529,591 Bitcoins less than a year ago.
Although these figures may seem large at first glance, they conceal a more complex reality: the overall trend is a steady decline. So what exactly is happening?
American dominance and China's hidden role
- The United States: The US federal government ranks first as the largest national holder of Bitcoin. However, it does not buy the cryptocurrency directly; it usually seizes it in criminal operations. Since the end of President Joe Biden's term until now, the United States has begun to liquidate some of these holdings, raising questions about the future of its digital policies.
- China: Despite its hostile stance towards cryptocurrencies, China holds a large stock estimated at around 200,000 Bitcoins that were seized in 2020. However, it seems Beijing prefers to "keep these assets dormant" without acting on them, making it a hidden yet powerful player in the cryptocurrency market.
Sales and liquidation deals... what's next?
- Germany and the United Kingdom: Both countries have fully or nearly liquidated their Bitcoin holdings. Germany sold all its stock to cover a budget deficit, while the UK adopted a strategy similar to China's, holding onto assets without movement.
- Ukraine: In an unprecedented move, Ukraine sold its entire Bitcoin holdings to fund its ongoing war efforts. This country was one of the few that received donations via cryptocurrencies, but the war forced it to liquidate these assets.
El Salvador: The only exception
While most governments are retreating from investing in Bitcoin, there is one clear exception: El Salvador. Under the leadership of President Nayib Bukele, El Salvador became the first country in the world to make Bitcoin legal tender alongside the US dollar. Despite international pressures, including International Monetary Fund conditions, the country continues to buy more Bitcoin.
While this decision sparked controversy within the country, it reflects a clear vision for the future of cryptocurrencies as a means to boost the national economy.
Summary: Is Bitcoin in danger?
Data suggests that governments are not necessarily enthusiastic about Bitcoin as some believe. While some countries hold massive holdings, most did not acquire them through direct purchase but through the seizure of criminal assets. The current trend shows that many countries tend to "dump" rather than "accumulate," leaving El Salvador as the sole player in this field.
With only a few governments (only seven) holding active holdings, any potential political change could destabilize this already fragile market. While Bitcoin remains an attractive investment tool, the role of governments in it may be more fragile than it seems.
The question now is: Will cryptocurrencies remain part of future government strategies, or are we witnessing the beginning of the end of this era?