The U.S. government has quietly amassed a staggering $5 billion fortune in Bitcoin, making it one of the world’s largest holders of the popular cryptocurrency, as reported by The Wall Street Journal. This impressive cryptocurrency stash is the result of the government’s relentless efforts to combat cybercrime and illicit online activities.
The accumulation of Bitcoin under government control can be traced back to several high-profile operations targeting cybercriminals and darknet platforms. A notable case was the extended investigation into the Bitfinex cyber attack, which concluded after nearly six years, resulting in a substantial Bitcoin seizure by the Justice Department.
Similarly, the shutdown of the infamous Silk Road online drug marketplace in 2013 led to the confiscation of a significant volume of bitcoins. Other operations targeting individuals and entities involved in cybercrimes, such as the cases against Ilya Lichtenstein and Heather Morgan, have also contributed to this expanding reserve.
According to The Wall Street Journal, these actions represent just the tip of the iceberg, with many other ongoing operations consistently adding to the government’s vast Bitcoin holdings. Handling and liquidating these seized Bitcoins is intricate and time-consuming, often taking several years to resolve.
Once the legalities are settled, the U.S. Marshals Service takes charge of selling these assets. Auctions have historically been the preferred method, attracting high-profile buyers like venture capital legend Tim Draper.
Bitcoin Beneficiary of Currency Debasement
Recently, Bloomberg crypto market analyst Jamie Coutts predicted that BTC will be a major beneficiary of the U.S. government’s inevitable return to currency debasement. Coutts suggested allocating just 1% of a traditional 60/40 portfolio (comprising stocks and bonds) to Bitcoin between 2015 and 2022 would have significantly boosted investor gains.
However, he cautioned that even with this optimized strategy, the average 60/40 portfolio would struggle to outperform the impact of currency debasement.
Coutts believes that hard assets like BTC will thrive as more investors factor currency debasement into their portfolios while government bonds will suffer. He emphasized that nominal returns are ineffective in the current central bank-driven monetary environment and stated, “Debasement is the only option” for the U.S. government.
In this context, bonds are expected to be the biggest losers as investors increasingly consider including Bitcoin in their diversified portfolios.
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