When the State Moves Coins: Why Bitcoin’s Biggest ETF Is Soaring While Governments Quietly Reshuffle

Core Insights - Bitcoin's supply dynamics are shifting due to institutional flows into long-term custody via spot ETFs and movements from government-controlled wallets, raising questions about price reactions when most available supply is committed [1] Group 1: Institutional and Government Dynamics - Spot ETF inflows are actively removing circulating coins from the market, compressing liquidity, while government wallet movements create caution due to their opaque timing and purpose [2] - BlackRock's iShares Bitcoin Trust has become the largest custodian among spot ETFs, holding over 800,000 BTC, which is approximately 3.8% of the total supply, contributing to a combined share of over 5% held by regulated funds [3] - The tightening of available float across exchanges has been significant, with major platforms like Binance, Coinbase, and Kraken seeing a decline of over 90,000 BTC since late August, correlating with steady ETF inflows [4] Group 2: Government Holdings and Market Reactions - Recent transfers of nearly 667 BTC from U.S. government-linked addresses have raised concerns about potential sell pressure, despite these being internal shifts rather than sales [5] - The U.S. government holds over 200,000 BTC from enforcement seizures, with past sales closely timed with price dips, prompting traders to monitor these addresses alongside ETF flow data for liquidity planning [6] - The combination of steady institutional buying and static government balances creates a feedback loop that reduces tradable supply and heightens market sensitivity to liquidity changes [7]