Government Bitcoin Holdings Decline 1,635 BTC in 2026 as Kazakhstan and El Salvador Buck the Trend

Governments' combined Bitcoin (BTC) holdings have declined in 2026, falling from 647,231 BTC at the beginning of the year to 645,596 BTC — a reduction of 1,635 BTC. Bhutan recorded the sharpest decrease, with its tracked holdings dropping 91%, from 5,984 BTC to 518 BTC. Bhutan's government Bitcoin has been publicly linked to mining operations run through the kingdom's state-owned investment arm, Druk Holdings and Investments, in partnership with the mining firm Bitdeer. Even after the decline, tracked government wallets still hold roughly 3% of Bitcoin's fixed 21 million-coin supply cap.

Kazakhstan and El Salvador were the only governments to increase their holdings during the period, with Kazakhstan holding an estimated 3,544 BTC and El Salvador adding 287 BTC. El Salvador, the first country to adopt Bitcoin as legal tender in 2021, has publicized its acquisitions through its National Bitcoin Office, while Kazakhstan has ranked among the world's leading Bitcoin mining jurisdictions since China banned the practice in 2021.

The largest government holders

Despite the overall decline, the United States remains the largest government Bitcoin holder, with 328,372 BTC. China ranks second with 190,000 BTC, followed by the United Kingdom with 61,245 BTC. Ukrainian officials reportedly hold 46,351 BTC, placing Ukraine fourth, while El Salvador ranks fifth with 7,803 BTC. Together, these five governments account for the vast majority of tracked state-held Bitcoin.

Many of the largest national stockpiles, including those of the States, China, and the United Kingdom, originated from Bitcoin seized in criminal investigations rather than open-market purchases. In the U.S. case, a March 2025 executive order established a Strategic Bitcoin Reserve capitalized with forfeited Bitcoin, positioning the stockpile as a long-term reserve rather than an inventory awaiting liquidation.

The decline in tracked holdings does not necessarily mean all of the missing Bitcoin was sold, as some assets may have been transferred to wallets that are not tracked. For example, a recent report from AMBCrypto highlighted that the U.S. government transferred 833.6 BTC — worth $71.6 million — to Coinbase Prime on October 7.

U.S. demand signals point lower

The holding data comes as U.S. institutional investors also appear to be facing stronger selling pressure. The Coinbase Premium Index, which has remained deeply negative, indicates that Bitcoin is trading at a lower price on Coinbase than on Binance. In practical terms, such a gap signals weaker demand among U.S.-based investors compared with Binance participants, although it does not directly confirm institutional selling. The gauge is tracked closely because Coinbase has historically been a primary venue for U.S. institutional order flow.

The development is unfolding against a broader economic environment that is also weighing on sentiment. Rising bond yields make fixed-income investments more attractive, while persistent inflation and geopolitical conflicts add uncertainty. A stronger U.S. dollar can also tighten financial conditions and reduce investors' appetite for riskier assets such as Bitcoin.

For Bitcoin, this creates a challenging near-term outlook. If institutional selling continues while liquidity remains tight, BTC could struggle to recover or face further downside pressure.

On-chain metrics and market indicators

Bitcoin was trading at $83,168.42 at press time after a modest drop. The Relative Strength Index (RSI) has moved below the neutral level, suggesting that bears have overtaken bulls, while the narrowing, parallel-running Bollinger Bands suggest the current momentum might continue.

Bitcoin spot ETFs, a category U.S. regulators approved in January 2024, have also seen $278.37 million in net outflows so far in October, following strong inflows of $2.65 billion in September. Upcoming daily ETF flow disclosures, alongside the direction of the Coinbase Premium Index, will indicate whether October's softer U.S. demand pattern persists through the remainder of the year.

Not every indicator is bleak, however. Bitcoin's Net Unrealized Profit/Loss (NUPL) has recovered significantly in October 2026, rising to approximately 0.351. This indicates that Bitcoin holders are sitting on substantial unrealized profits, suggesting improved market sentiment compared with the June–July period, when NUPL fell close to 0.10.

Summary

While Bhutan's government has seen the steepest drop in tracked Bitcoin holdings, Kazakhstan and El Salvador are the only governments to have increased their holdings in 2026. Meanwhile, Bitcoin spot ETFs have recorded $278.37 million in net outflows so far in October, after $2.65 billion in inflows in September.