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US Government Continues Bitcoin Seizures, Controls Nearly 1% of Circulating Supply

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The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

The United States federal government has once again added to its substantial Bitcoin hoard, transferring $922 million worth from wallets associated with Bitfinex hackers in a seizure.

Over the course of a series of various seizures and other asset forfeitures, the United States federal government has accumulated and holds enough Bitcoin to unquestionably count as one of the largest whales. In the earliest days of the Bitcoin scene, the overwhelming crypto-anarchist spirit among the community led to a series of various extralegal business ventures, most famously the Silk Road. This overtly illegalist era of the industry is more or less completely over, but the success of these early ventures accumulated massive amounts of Bitcoin: which has in time been accumulated by the US government.

The Silk Road alone has been at the center of several massive seizures from law enforcement agencies, with the site’s actual coffers far from the only source. On multiple occasions over the last few years, various hackers who robbed the Silk Road have in turn seen their assets seized and added to the federal government’s massive stockpile. Even though hundreds of millions of bitcoins from this source have already been sold at government auctions or through other means, there are still billions left to go. For their part, law enforcement agencies seem to be in no hurry to wash their hands of these assets.

Source

On February 29, the stockpile grew once again when the government moved more than 15k bitcoins from the wallets of two Bitfinex hackers. The hackers, Ilya Lichtenstein and Heather “Razzlekhan” Morgan, recently testified about their 2016 hack of Bitfinex, which ranks as one of the most profitable heists of all time with nearly 120k bitcoins stolen. Bitfinex, one of the oldest still-operating exchanges in the entire crypto ecosystem, is still a prominent service, but their operations still bear lingering scars from a theft of this magnitude. For one thing, US citizens are completely forbidden from accessing the platform, along with citizens from several other countries. Perhaps it is for this reason that the Justice Department has refused to state whether or not the government intends to reimburse Bitfinex’s 2016 customers, who actually had their money stolen.

Regardless of what the government’s plans are with this money, a seizure like this has once again highlighted the sheer size of the federal government’s Bitcoin reserve. Thankfully, the government’s dealings with these assets are all a matter of public record, and Bitcoin transactions themselves are all completely transparent on the blockchain. For this reason, analysts are confident in the claim that the United States holds just shy of 200k bitcoins, worth approximately $12.1 billion. This makes them unmistakably one of the largest whales out there, with only Binance and Satoshi holding greater amounts. In fact, the government currently holds nearly 1% of all Bitcoin in circulation. Regardless of claims that prosecutors have no interest in maximizing profits when disposing of these assets, it’s undeniable that the government holds substantial leverage over the whole space.

These seizures are particularly interesting due to some recent comments made by exiled whistleblower Edward Snowden. Specifically, considering the rising global acceptance of Bitcoin in regulation and traditional finance, Snowden predicted that “A national government will be revealed this year to have been buying Bitcoin—the modern replacement for monetary gold—without having disclosed that fact publicly”. If Bitcoin is the digital gold, after all, it would only make sense that powerful nations would want to build up reserves. The strategy has famously worked for the Salvadoran president, Nayib Bukele, who greeted the new bull market with a declaration that his country’s Bitcoin investment has gone up by 40% since the initial purchases. Not, of course, that he plans to sell.

In any event, Snowden’s comments seem especially relevant in that the United States hasn’t actually purchased any of the Bitcoin it currently holds. Even though the government has a theoretical responsibility to dispose of these assets, the pace as of yet has been glacial, and in the meantime, it would be extremely straightforward for Congress to halt these sales. All it would take is a desire for the policy to change, and a genuine Bitcoin reserve could spring up overnight. This is the crux of Snowden’s specific prediction that governments will acquire Bitcoin secretly and that the government has ample plausible deniability. We don’t have a reserve; we just happen to be reserving these assets for a later sale. There is nothing suspicious about that!

If a government did actually want to acquire massive quantities of Bitcoin in secret, it would run into a great number of transparency problems caused by the trustless nature of Bitcoin’s blockchain. The anonymous “Mr. 100” has made headlines throughout the month of February, acquiring a mind boggling 100 BTC per day and reaching the status of the 15th largest whale. As chain analysts have tried to determine the buyer’s identity, speculation has already begun that a national government is the culprit. Based on the timing of the purchases and several other factors, the buyer is likely in Asia, specifically the Middle East. Qatar, the United Arab Emirates, Saudi Arabia—all these are strong candidates to be the coins’ rightful owners.

In other words, if a government wishes to build up a Bitcoin reserve, it might be easier to seize the assets outright rather than buy them at fair value. After all, if the transactions will be recorded on the blockchain either way, why not save their money? The UK seems well-positioned to build up a stockpile in this way like the Americans, having seized $1.77 billion in January. Not only were these bitcoins seized from a foreign national currently on the run, with no recourse to recoup these funds, but the British government has subsequently passed legislation deepening its power to seize or freeze cryptocurrency assets. It wouldn’t take much to start building up a notable hoard in its own right.

By this point, the days when Bitcoin’s core community held a defiant attitude towards law enforcement are a distant memory. Although people can commit crimes centered around Bitcoin just like they can with any other currency, the fact of the matter is that Bitcoin is only becoming more legitimate for the world’s governments. US regulators approved a Bitcoin ETF, and other countries are falling like dominoes to endorse it themselves. Eventually, it’ll be a necessity for powerful governments to stay on par with their competitors and maintain their own reserves of Bitcoin. The US, after all, controls nearly 1% of a massive industry with substantial leverage over it. Are they going to be the only country with this leverage? It may be difficult for any nation to build up these stockpiles in secret, but even so, the race has already begun. No matter who wins it, it’s Bitcoin that will be on top in the end. 

​ Massive Bitcoin seizures from Bitfinex hackers add to US government stockpile. Snowden predicts major government entry into Bitcoin market. 

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Crypto News

El Salvador Is Still Bitcoin Country

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Follow Frank on X.

El Salvador is still Bitcoin country, despite the fact that bitcoin is no longer legal tender in the country — at least from where I’m sitting.

Let’s start with some background on the matter.

On January 29, 2025, the Legislative Assembly in El Salvador voted to remove bitcoin’s status as legal tender.

This means that businesses in the country no longer have to accept bitcoin (not that this rule was ever strictly enforced while bitcoin was classified as legal currency, as far as I know; however, I have been told that big businesses that operate in the country (e.g., McDonalds, Walmart) may stop accepting bitcoin as payment now, which could have a detrimental effect on adoption).

This change occurred approximately one month after the International Monetary Fund (IMF) struck a deal with authorities in El Salvador that stipulated the following:

  • El Salvador would receive a $1.4 billion loan to support the government’s “reform agenda”
  • Bitcoin-related risks be mitigated; bitcoin acceptance in the private sector must be voluntary, while the public sector’s participation in Bitcoin-related activities would be “confined” (bitcoin can no longer be used to settle government debts or pay taxes)
  • Operations for the government-created Bitcoin wallet, Chivo, would be “unwound”

While the news of the Salvadoran government’s reversing its policy on bitcoin as legal tender as a result of influence from the IMF feels like a gut punch even to me, someone who isn’t Salvadoran and doesn’t live in the country, I can’t help but believe that El Salvador is still Bitcoin country.

And this feeling has only grown stronger based on what I’ve seen Bitcoiners in El Salvador posting on X.

Evelyn Lemus, co-founder and Director of Education at Bitcoin Berlin, a Bitcoin circular economy within the country, doesn’t plan to stop teaching everyday Salvadorans about Bitcoin.

The team at Bit Driver don’t plan to change their business model — accepting bitcoin as taxi fare — any time soon.

While John Dennehy, founder of Mi Primer Bitcoin, expressed concern about the government of El Salvador’s rolling back its policy on bitcoin as legal currency, he and the ever-growing team at Mi Primer Bitcoin plan to double down on the work they’re doing.

The legendary Max and Stacy haven’t publicly voiced any plans to give up on El Salvador anytime soon.

And El Salvador’s Bitcoin Office, run by Stacy, is still stacking bitcoin and helping to run Bitcoin education programs in the country.

The lesson here is that while the law around Bitcoin may have changed in El Salvador, the Bitcoiners on the ground in the country have hardly flinched.

Because we are Bitcoin, what matters most is that everyday Salvadorans and everyone else involved in the Bitcoin movement in El Salvador continues to push forward with the Bitcoin mission.

The IMF may have landed a blow, but Bitcoiners in El Salvador remain steadfast in their efforts to foster broader Bitcoin adoption.

El Salvador is still Bitcoin country.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

 Bitcoin may no longer be legal tender in El Salvador, but Bitcoiners in the country haven’t given up on the mission. 

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Introducing the Bitcoin Everything Indicator

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Wouldn’t it be great if we had one all-encompassing metric to guide our Bitcoin investing decisions? That’s precisely what has been created, the Bitcoin Everything Indicator. Recently added to Bitcoin Magazine Pro, this indicator aims to consolidate multiple metrics into a single framework, making Bitcoin analysis and investment decision-making more streamlined.

For a more in-depth look into this topic, check out a recent YouTube video here: The Official Bitcoin EVERYTHING Indicator

Why We Need a Comprehensive Indicator

Investors and analysts typically rely on various metrics, such as on-chain data, technical analysis, and derivative charts. However, focusing too much on one aspect can lead to an incomplete understanding of Bitcoin’s price movements. The Bitcoin Everything Indicator attempts to solve this by integrating key components into one clear metric.

Figure 1: The new Bitcoin Everything Indicator.

View Live Chart 🔍

The Core Components of the Bitcoin Everything Indicator

Bitcoin’s price action is deeply influenced by global liquidity cycles, making macroeconomic conditions a fundamental pillar of this indicator. The correlation between Bitcoin and broader financial markets, especially in terms of Global M2 money supply, is clear. When liquidity expands, Bitcoin typically appreciates.

Figure 2: Global Liquidity cycles have had a major influence on BTC price action.

View Live Chart 🔍

Fundamental factors like Bitcoin’s halving cycles and miner strength play an essential role in its valuation. While halvings decrease new Bitcoin supply, their impact on price appreciation has diminished as over 94% of Bitcoin’s total supply is already in circulation. However, miner profitability remains crucial. The Puell Multiple, which measures miner revenue relative to historical averages, provides insights into market cycles. Historically, when miner profitability is strong, Bitcoin tends to be in a favorable position.

Figure 3: BTC miner profitability has been an accurate gauge of network health.

View Live Chart 🔍

On-chain indicators help assess Bitcoin’s supply and demand dynamics. The MVRV Z-Score, for example, compares Bitcoin’s market cap to its realized cap (average purchase price of all coins). This metric identifies accumulation and distribution zones, highlighting when Bitcoin is overvalued or undervalued.

Figure 4: The MVRV Z-Score has historically been one of the most accurate cycle metrics.

View Live Chart 🔍

Another critical on-chain metric is the Spent Output Profit Ratio (SOPR), which examines the profitability of coins being spent. When Bitcoin holders realize massive profits, it often signals a market peak, whereas high losses indicate a market bottom.

Figure 5: SOPR gives insight into real-time realized investor profits and losses.

View Live Chart 🔍

The Bitcoin Crosby Ratio is a technical metric that assesses Bitcoin’s overextended or discounted conditions purely based on price action. This ensures that market sentiment and momentum are also accounted for in the Bitcoin Everything Indicator.

Figure 6: The Crosby Ratio has technically identified peaks and bottoms for BTC.

View Live Chart 🔍

Network usage can offer vital clues about Bitcoin’s strength. The Active Address Sentiment Indicator measures the percentage change in active addresses over 28 days. A rise in active addresses generally confirms a bullish trend, while stagnation or decline may signal price weakness.

Figure 7: AASI monitors underlying network utilization.

View Live Chart 🔍

How the Bitcoin Everything Indicator Works

By blending these various metrics, the Bitcoin Everything Indicator ensures that no single factor is given undue weight. Unlike models that rely too heavily on specific signals, such as the MVRV Z-Score or the Pi Cycle Top, this indicator distributes influence equally across multiple categories. This prevents overfitting and allows the model to adapt to changing market conditions.

Figure 8: The most influential factors impacting the price of bitcoin.

Historical Performance vs. Buy-and-Hold Strategy

One of the most striking findings is that the Bitcoin Everything Indicator has outperformed a simple buy-and-hold strategy since Bitcoin was valued at under $6. Using a strategy of accumulating Bitcoin during oversold conditions and gradually selling in overbought zones, investors using this model would have significantly increased their portfolio’s performance with lower drawdowns.

Figure 9: Investing using this metric has outperformed buy & hold since 2011.

For instance, this model maintains a 20% drawdown compared to the 60-90% declines typically seen in Bitcoin’s history. This suggests that a well-balanced, data-driven approach can help investors make more informed decisions with reduced downside risk.

Conclusion

The Bitcoin Everything Indicator simplifies investing by merging the most critical aspects influencing Bitcoin’s price action into a single metric. It has historically outperformed buy-and-hold strategies while mitigating risk, making it a valuable tool for both retail and institutional investors.

For more detailed Bitcoin analysis and to access advanced features like live charts, personalized indicator alerts, and in-depth industry reports, check out Bitcoin Magazine Pro.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.

 A Single Metric to Rule Them All – The Bitcoin Everything Indicator combines multiple key metrics into one comprehensive tool for better investment decisions. 

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Crypto News

Here’s The Secret To Investing In Bitcoin

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Follow Frank on X.

Over the course of the last week, we’ve seen reports of massive bitcoin liquidations.

For those unfamiliar with the term “liquidation” as it applies to finance, it refers to when a trader is forced to close a leveraged trade because the margin for the trade has been depleted.

In everyday pleb terms, it’s when someone borrows money to bet on the direction of the price of bitcoin and they get it wrong, resulting in their losing the money they put up for the trade (or more, in some cases).

When it comes to trading bitcoin with leverage, I keep in mind the first line from the post below:

So, lesson number one in investing in bitcoin is don’t do so with leverage. (Not financial advice.)

Even now that bitcoin has about a $2 trillion market cap, it’s still a highly volatile asset. Its price fluctuates notably in response to news. Because of this, it’s much safer to just buy some bitcoin on the spot market and hold it for the long run (at least four years).

What is more, when and if you choose to buy some bitcoin in the spot market, consider remaining underexposed to bitcoin instead of overexposed to it (those terms are subjective; interpret them as you will).

When you’re overexposed to bitcoin, or if you’re new to the market and you’ve gone all in on bitcoin, it’s more likely that you’ll panic sell if its price tanks in the short term.

How will you know if you’re overexposed? You’ll likely begin losing sleep over it and/or being investing emotional energy in hoping that bitcoin’s price moves in a certain direction (up only).

I share this based on experience. I was overexposed to bitcoin in 2021-2022, and I often felt sick because of it. Once I lessened my exposure, I felt better and was able to think more clearly.

Find an investment threshold with which you’re comfortable, and, again, plan to hold for the long haul.

Aiming to get rich quick with bitcoin is nearly a sure fire recipe for getting yourself rekt.

Take it slow, and heed the very wise advice of legendary Bitcoiner Matt Odell: stay humble, stack sats.

(The inverse of such sage advice would be: be irrational, bet on bitcoin irresponsibly.)

Be careful out there.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

 Don’t use leverage, and don’t overexpose yourself to it. 

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