The United States government’s recent decision to transfer $1.9 billion worth of Bitcoin to Coinbase has drawn sharp criticism from crypto industry leaders and analysts. Many argue the move reflects a misunderstanding of Bitcoin’s potential, calling it a significant strategic misstep.

Jason Lowery, a United States Space Force engineer, was among the critics. On Dec. 3, he posted on X (formerly Twitter), “This is a huge strategic mistake. There is no price where it makes sense for the US to sell any Bitcoin it has under its control.”

Lowery further expressed concern about the government’s lack of awareness regarding the value of Bitcoin, adding, “They have no idea what they own, and it shows.” He warned that this decision could lead to future regret, referencing historical missteps like Executive Order 6102, which required Americans to relinquish privately held gold to the government in 1933.

$1.9 Billion Bitcoin Transfer Sparks Controversy

On Dec. 2, the US government transferred approximately 19,800 BTC—valued at $1.9 billion at the time—to Coinbase Prime. This transfer has reignited debate about how governments should handle their Bitcoin holdings.

Coinbase CEO Brian Armstrong also voiced his disapproval, stating, “Agreed—the US government should never sell Bitcoin IMO [in my opinion].”

Crypto educator Toby Cunningham added his criticism, remarking, “If they are dumb enough to sell (which we all know governments are dumb), then that supply will get eaten up instantly.” Others speculated the move might be politically motivated, with one observer commenting, “Biden will do as much damage as he can before he leaves office.”

Is the Government Selling or Consolidating?

The transfer of Bitcoin to Coinbase has fueled speculation about the government’s intentions. Some industry analysts believe the move may not necessarily indicate an imminent sale.

Spot On Chain, a blockchain analytics platform, suggested these transactions could be related to custody actions rather than outright sales. It noted that while the government transferred 25,999 BTC worth approximately $2.49 billion to Coinbase this year, there is no concrete evidence confirming the sale of the entire amount.

Gabor Gurbacs, a strategy adviser for Tether, supported this theory. “There is also a lot we don’t know. It’s not guaranteed they will sell. I haven’t seen any official auction information yet,” he said.

Meanwhile, CryptoQuant’s Head of Research, Julio Moreno, reported that only 10,000 BTC were likely sold in the most recent transactions. The remaining 9,800 BTC appear to have been sent to a newly created address.

Strategic Implications of Selling Bitcoin

Critics argue that selling Bitcoin, especially in large amounts, undermines its potential as a long-term strategic asset. Bitcoin is often likened to digital gold, a store of value that could prove invaluable during periods of economic uncertainty.

By offloading Bitcoin, the US government may inadvertently limit its financial arsenal, especially as Bitcoin continues to gain traction as a hedge against inflation and currency devaluation.

Jason Lowery warned that such short-term thinking could lead to future regret, particularly if Bitcoin achieves broader adoption and value appreciation.

Government Bitcoin Reserves and Market Impact

Despite the recent transfers, the US government still holds a significant amount of Bitcoin. According to Spot On Chain, the government retains approximately 183,850 BTC, worth around $17.7 billion. These holdings are spread across various known wallet addresses.

The market impact of the government’s Bitcoin movements was immediate but short-lived. Following the Dec. 2 transfer, Bitcoin’s price dipped by nearly 3%, falling to $94,500. However, it quickly recovered and was trading around $96,000 at the time of writing.

Future Implications

The US government’s handling of its Bitcoin reserves raises questions about its understanding of digital assets. Critics emphasize the need for a more strategic approach, one that considers Bitcoin’s long-term potential rather than short-term fiscal gains.

Whether the recent transfers were merely custodial actions or precursors to larger sales remains to be seen. However, one thing is clear: the debate over Bitcoin’s role in national strategy is far from over.