Bitcoin Whales, Not Retailers, Are Safe If The United States Government Begins Confiscating Coins: Analyst

Willy
Woo,
an
on-chain
analyst,
took
to
X
on
April
29, raising concerns
about
the
fate
of
retail
Bitcoin
investors
if
the
world,
especially
the
United
States,
plunges
into
a
recession.

Woo,
referencing
historical
events,
argues
that
while
large
Bitcoin
holders,
or
“whales,”
are
likely
to
weather
the
storm
since
they
control
private
keys
of
their
coins,
retailers
or
everyday
BTC
investors
might
face
a
different
reality.

Who
Will
Be
Safe
If
The
United
States
Government
Began
Confiscating
Bitcoin?

The
analyst
compares
the
current
market
and
the
economic
downturn
of
the
Great
Depression
of
1930.
During
that
time,
the
United
States
government,
Woo
warned,
seized
gold
from
the
public
to
replenish
national
reserves. 

Woo
now
raises
the
question
of
whether
a
similar
scenario
could
unfold
with
Bitcoin.
If
so,
it
could
potentially
lead
to
more
severe
consequences
for
retail
investors.

Whether
the
government
will
succeed
or
not
will
largely
depend
on
one
crucial
factor:
Bitcoin
storage.
Sharing
data,
Woo
notes
that
a
staggering
87%
of
Bitcoin
is
held
in
self-custody
wallets.
For
instance,
through
these
wallets,
like
the
Samourai
wallet,
individuals
control
their
private
keys,
meaning
they
can
sign
transactions,
proving
that
they
own
coins. 

Meanwhile,
roughly
1%
are
held
by
spot
Bitcoin
exchange-traded
fund
(ETF)
issuers
like
Fidelity.
Spot
ETF
issuers,
especially
from
the
United
States,
offering
competitive
and
low
rates,
have
been
rapidly
buying
BTC
from
multiple
sources,
including
via
exchanges
and
over-the-counter
(OTC)
markets,
to
meet
the
rising
demand
from
investors,
including
institutions.

According
to
Lookonchain data,
by
April
26,
all
spot
Bitcoin
ETF
users
held
over
834,000
BTC
less
than
three
months
after
launching.

On
the
other
hand,
12%
of
all
BTC
sits
on
exchanges
like
Binance,
Kraken,
and
Coinbase.
Most
of
these
coins
belong
to
investors
or
traders
who
actively
engage.
Through
centralized
exchanges,
BTC
holders,
though
not
in
control
of
their
coin’s
private
keys,
can
liquidate
for
altcoins
like

Cardano,
fiat
like
USD,
or
even
stablecoins.  

United
States
Inflation
Rising,
GDP
Data
Soft:
Recession
Incoming?

While
most
BTC
is
held
via
non-custodial
wallets,
Woo
said
this
route
is
taken
mainly
through
whales.
On
the
other
hand,
most
retailers
fall
in
the
12%
category,
keeping
their
coins
via
centralized
exchanges.
This
distinction,
Woo
continues,
becomes
critical
during
economic
turmoil.

Still,
it
remains
unclear
who
a
whale
is,
per
Woo’s
categorization.
Bitinfocharts data on
April
29
shows
that
over
65%
of
BTC
is
in
the
hands
of
those
who
control
less
than
0.1
BTC
or
retailers. 

Some
analysts
worry
that
rising
inflationary
prices
in
the
United
States
and
falling
real
GDP,
as
economic
data
shows,
might
plunge
the
country
into
a
recession.
For
now,
eyes
will
be
on
the
Federal
Reserve
(Fed)
and
Jerome
Powell
when
they
set
the
country’s
interest
rate
this
week.

Feature
image
from
Canva,
chart
from
TradingView