Government Bitcoin holdings experienced a notable decline in 2026, falling from 647,231 BTC at the beginning of the year to 645,596 BTC - a reduction of 1,635 BTC. According to reports from AMBCrypto, this decline raises questions about Bitcoin's demand environment despite improving on-chain profitability metrics. The U.S. remains the largest government Bitcoin holder with 328,372 BTC, followed by China with 190,000 BTC and the U.K. with 61,245 BTC. However, some Bitcoin may have moved to untracked wallets rather than being sold, suggesting the decline may not entirely reflect actual selling pressure.
The decline was not uniform across all governments, with Bhutan recording the sharpest drop of 91% from 5,984 BTC to 518 BTC. However, AMBCrypto reports that Kazakhstan and El Salvador are the only governments to have increased their holdings, with Kazakhstan holding an estimated 3,544 BTC and El Salvador adding 287 BTC. Ukraine officials reportedly hold 46,351 BTC, placing it fourth, while El Salvador ranks fifth with 7,803 BTC.
The government holdings decline coincides with challenging conditions for U.S. institutional investors, as reported by AMBCrypto. The Coinbase Premium Index remained deeply negative, indicating that Bitcoin is trading at a lower price on Coinbase than on Binance. This signals weaker demand among U.S.-based investors compared with Binance participants, though it does not directly confirm institutional selling. The Bitcoin spot ETF has seen $278.37 million in net outflows so far in October, following strong inflows of $2.65 billion in September. Market pressures include weaker U.S. institutional demand, rising bond yields, inflation, geopolitical tensions, and a strong U.S. dollar, all challenging Bitcoin's near-term outlook.
Despite the institutional challenges, on-chain metrics suggest improved market sentiment. According to AMBCrypto, 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. The price of Bitcoin was trading at $83,168.42 at press time after a modest drop, with the RSI indicator moving below the neutral level.
