Venezuelan crypto reserve: when freezing millions of BTC will change the supply balance

After the arrest of the President of Venezuela on charges of international crimes, discussions around the country’s hidden assets have sharply intensified. Intelligence sources and journalistic investigations hint at a massive Bitcoin position that has been accumulated over the years outside of official registries. Unlike the publicly announced 240 BTC (approximately $22 million at the current rate), experts estimate the actual volume at around 600,000 BTC — nearly $60 billions or about 3% of all Bitcoin in circulation.

How Venezuela accumulated such a large reserve

The accumulation route traces back to 2018, when the state began converting gold mined in the Orinoco mining district into digital assets. Estimates suggest that approximately $2 billions of gold reserves were exchanged for Bitcoin at prices around $5 000 per coin — which would amount to about 400,000 BTC. At today’s $90 000-$93 000 per unit, these assets are valued at over $35 billions.

Additionally, when traditional banking channels were closed due to sanctions, oil trading partners were forced to settle transactions via stablecoins, primarily USDT. Since stablecoins are vulnerable to blocking and confiscation, assets were quickly transferred into Bitcoin — a more reliable store of value under geopolitical instability. This process created a prolonged flow of acquisitions, which over the years formed a huge position.

The country’s internal policy reflects this strategy. Private crypto mining was banned in 2024, equipment was confiscated, and the state token Petro quietly ceased to exist. The result was the centralization of all cryptographic assets under state control abroad.

Confiscation as a market dislocation tool

If the US identifies and seizes these wallets, the most likely scenario is full asset freezing. Creditors associated with Venezuela’s sovereign default will immediately file claims. Legal processes will drag on for years, during which 600,000 BTC will remain in a state of complete blockade and unable to enter the market.

For the cryptocurrency market, this means removing a huge volume of supply from circulation. For comparison: when Germany sold 50,000 BTC in 2024, it caused a 15-20% price drop. The Venezuelan reserve exceeds this volume by more than twelve times. Forced liquidation of such an amount would cause serious damage to prices and devalue the assets themselves — thus this scenario is considered unlikely.

Strategic holding and market impacts

A more probable trajectory is long-term strategic holding. The US already owns over 325,000 BTC obtained from previous confiscations. Adding hundreds of thousands more coins to the Federal Reserve would mean a fundamental reduction in active supply on the market.

Traders and institutional players are already recognizing these signals. Bitcoin is currently trading above its 50-day moving average, and on the Deribit platform, the most active position is an option at $100 000 — indicating significant interest in upward potential amid supply contraction.

The geopolitical situation and potential confiscation create a unique scenario where asset scarcity on the market may be ensured not by mining or organic demand, but solely by the state, which forces assets into a frozen state for an indefinite period.