U.S. Boosts Bitcoin Reserves with 127K BTC Seizure
Under the Trump administration, U.S. crypto policy shifted from routine sales to the retention of seized bitcoins in a Strategic Bitcoin Reserve. The DOJ recently confiscated 127,271 BTC (about $15 billion) from a global fraud network led by Chen Zhi, who used forced labor in Cambodia and laundered proceeds through firms like Warp Data and LuBian. A 2020 private key leak at LuBian, known as “Milk Sad,” also contributed to the seized assets. Following a March 6 executive order, U.S. Bitcoin reserves jumped 64%, exceeding 3.5% of the nation’s gold holdings. The U.S. now ranks as the world’s second-largest Bitcoin holder after MicroStrategy. Analysts warn that expanding Bitcoin reserves could tighten market liquidity and drive price volatility. Traders should monitor potential impacts on supply, ETF flows, and overall market dynamics as the hold strategy is set to continue through 2028.
Bullish
By retaining 127K BTC seized from a major fraud network, the U.S. government removes a significant supply from the open market. This move signals institutional confidence in bitcoin’s long-term value and mirrors past events where large holders reduced sell-pressure, supporting price gains. The establishment of a Strategic Bitcoin Reserve under an executive order adds policy certainty and may spur bullish sentiment, especially as ETF flows and liquidity dynamics adjust to a tighter supply. In both short and long term, the reduction in available BTC and clear government backing are likely to underpin upward price momentum.