Venezuela is sitting on no less than 600,000 Bitcoin [BTC]. If the US seizes the coins following the imprisonment of President Nicolas Maduro, it will likely be embroiled in legal battles for years.
About 3% of Bitcoin’s total supply could be effectively removed from circulation without a single transaction taking place.
For an asset with a limited supply, this is crucial.
One of the largest reserves of crypto
The markets are fixated on Venezuela’s vast oil wealth, but here’s a look between the lines. The regime built a Bitcoin ‘shadow reserve’.
Starting in 2018 with the sanctions, Venezuela is said to have used gold swaps, forced oil-for-USDT settlements and seized mining operations to accumulate crypto.
Gold from the Orinoco Mining Arc was liquidated and by some estimates nearly $2 billion was converted into Bitcoin at prices around $5,000 (about 400,000 BTC).
Source:
When state-backed ‘Petro’ failed, USDT became an oil sales solution before quietly being flushed into Bitcoin to avoid Tether’s freeze risk.
Add later inflows and estimates place now Venezuela’s holdings amount to 600,000-660,000 BTC, worth over $60 billion.
Why this is changing the BTC market
To understand the impact, compare this to the German sale of around 50,000 BTC in 2024. That liquidation caused a 15-20% correction and weeks of bearishness.
Venezuela’s stockpile is twelve times larger.
At this scale it competes with MicroStrategy [MSTR] and sits just below BlackRock’s IBIT ETF. It is also almost double the US government’s known Bitcoin holdings.
If the US locks up these coins, about 3% of Bitcoin’s circulating supply could disappear from the market without being sold.
Why a fire sale is unlikely
The most likely outcome is a freeze. Legal battles, forfeiture claims and disputes with creditors could keep these coins in custody for years.
A strategic reserve is also plausible, especially given President Donald Trump’s public openness to holding confiscated Bitcoin as a long-term asset.
A quick liquidation remains the least likely option. Politically and strategically, dumping such a large amount of Bitcoin would destroy stability and the broader ‘Bitcoin reserve’ narrative.
In the short term…
Uncertainty can lead to major movements, but… the numbers look calm. There are no signs of a wave of panic selling; similar patterns are visible during recent geopolitical conflicts.
BTC is becoming increasingly immune to macroeconomic events.
Source: CryptoQuant
In the longer term, a forced lock-up of 600,000 BTC is bullish. The reduced supply of liquids favors large LTHs and makes a stronger case for Bitcoin’s scarcity story in the new year.
Final thoughts
- A potential freeze of 600,000 BTC could freeze 3% of Bitcoin’s supply.
- With no visible panic selling, the market seems to be viewing this shock as bullish.