The U.S. Strategic Bitcoin Reserve is facing potential complications that could drastically reduce its value without the government selling any of its holdings. Created last year by an executive order from former President Donald Trump, the reserve was intended to consolidate government-held Bitcoin (BTC) and ensure that the U.S. would not sell these digital assets.
Currently, estimates indicate that the U.S. government holds approximately 328,372 BTC, making it the largest state holder globally, valued at around $21.6 billion based on recent Bitcoin prices of $65,842. However, the reality of these holdings is more complicated, as much of the BTC linked to the reserve is entangled in legal issues.
One significant factor concerns approximately 94,643 BTC tied to the infamous 2016 Bitfinex hack, which represents nearly 30% of the government’s total BTC holdings. The executive order permits the restitution of these holdings to identifiable victims of crime, meaning if a court rules for repayment, the Strategic Bitcoin Reserve could shrink to about 234,000 BTC.
The discussion surrounding the reserve is often oversimplified, treating it as a sovereign asset. In reality, the assets represent a blend of fully forfeited Bitcoin and those still involved in legal proceedings or restitution claims. This entangled situation has become central to discourse about the U.S. reserve.
The Bitfinex theft is noteworthy as it involved one of the largest breaches in cryptocurrency history, with 119,754 BTC stolen in August 2016. Following its recovery by U.S. authorities in February 2022, discussions of restitution commenced. In January 2025, prosecutors requested a federal court to approve the return of these assets to Bitfinex as in-kind restitution, meaning the BTC would be returned directly rather than converted into cash first.
This crucial distinction impacts market structure significantly. A direct sale by the government would create a clear supply event; in contrast, returning the coins in-kind complicates matters, as recipients must navigate legal claims, delaying the decision about what to do with the BTC.
The legal proceedings are slow-moving, with competing claims complicating the restitution process. Some customers assert that the stolen assets rightfully belong to them, while Bitfinex contends that it suffered the financial loss and worked to make customers whole through internal measures. The resolution of these issues could set precedents for how such restitution is handled in future cases.
Meanwhile, traders are speculating on the outcome through UNUS SED LEO (LEO), the token associated with Bitfinex and iFinex. Should Bitfinex receive the recovered BTC, it plans to buy back and burn 80% of the assets, potentially creating a substantial buyback pipeline. This strategy turns the court decision into a market catalyst, allowing speculation around value appreciation pending legal resolution.
Current assessments of LEO show that it holds a market capitalization of approximately $8 billion, but with thin trading volume of just $7.1 million, its price can be extremely volatile. Some analysts note that LEO is trading at a significant premium to its fair value, creating noise in market sentiment. The legal conclusion regarding the Bitfinex coins could amplify or constrain this premium based on market reactions.
In the broader context, the current state of Bitcoin trading has seen a risk-averse atmosphere, with significant capital exiting spot Bitcoin ETFs recently. Headlines indicating that the U.S. might transfer a substantial amount of BTC are likely to spark volatility, even if those transfers are not classified as government sales.
Ultimately, how the narrative around the Strategic Bitcoin Reserve unfolds will likely hold more influence over market sentiment than the actual flows of BTC. Should the Bitfinex coins be granted back to their rightful claimants, it won’t signify a retreat from the U.S. reserve policy. Instead, it would align with the rule of law, emphasizing that the reserve was designed to coexist with the legal obligations surrounding restitution.
