Venezuela holds an estimated 600,000 Bitcoin (BTC). If the U.S. seizes the coins following President Nicolas Maduro’s capture, they are likely to face years-long legal proceedings.
A single trade could potentially remove about 3% of all Bitcoins from circulation. This is really important for an asset that is hard to find.
A significant cryptocurrency reserve
People are obsessed with Venezuela’s huge oil wealth, but here’s what you need to know. The government was building a “shadow reserve” of Bitcoin.
With the imposition of sanctions starting in 2018, Venezuela reportedly used gold swaps, forced oil-for-USDT settlements, and confiscated mining operations to obtain cryptocurrency.
The Orinoco Mining Arc sold gold, and some estimates say that around $2 billion worth of it was turned into Bitcoin at prices close to $5,000 (approximately 400,000 BTC).
When the state-backed “Petro” failed, USDT became a way to sell oil. Then, to prevent the possibility of Tether freezing, it was secretly laundered into Bitcoin. Adding further inflows, experts now think that Venezuela has between 600,000 and 660,000 BTC, which is worth more than $60 billion.
The implications of these alterations on the Bitcoin market
To get an idea of the effect, think about Germany’s sale of about 50,000 BTC in 2024. That liquidation led to a 15–20% drop and weeks of bearishness.
Venezuela has 12 times as much. At this size, it is similar to MicroStrategy [MSTR] and is just below BlackRock’s IBIT ETF. It is also almost twice as much as the U.S. government is known to own in Bitcoin.
If the U.S. locks up those coins, it could potentially remove almost 3% of Bitcoin’s circulation quantity from the market without any trading activity. A freeze is the most likely conclusion. Legal fights, claims of confiscation, and conflicts with creditors might keep these coins in escrow for years.
A strategic reserve is also possible, especially since President Donald Trump has said in public that he would be open to storing confiscated Bitcoin as a long-term asset.
The least likely alternative is still a quick liquidation. Dumping such a significant sum of Bitcoin would ruin stability and the larger “Bitcoin reserve” story from a political and strategic point of view.
There could be large changes because of uncertainty, but the numbers look calm. There are no indicators of a sudden rise in panic selling, as has happened in other geopolitical confrontations in the past.
BTC is becoming less affected by big economic events
A forced lock-up of 600,000 BTC is good for the long run. Less liquid supply is good for big LTHs and makes Bitcoin’s scarcity story stronger in the coming year.
A possible freeze of 600,000 BTC might lock up 3% of Bitcoin’s supply. The market seems to see this shock as good news because there isn’t any panic selling.