For months, Bitcoin traders have been asking the same question. Who keeps selling into strength? The pattern has been hard to ignore. Price pushes higher overnight, only to face steady sell pressure during the same hours almost every day. There is rarely a clear headline behind it, yet the selling keeps coming.
A growing body of on-chain data and investigative reporting now points to one likely source. Chinese local governments.
What you'll learn 👉
The Origin of the Supply Overhang
The story starts with the PlusToken case. Back in 2019, Chinese authorities seized roughly 194,000 Bitcoin tied to one of the largest crypto frauds in history. At the time, many assumed those coins would sit untouched for years.
That assumption no longer holds.
Recent reports indicate that local Chinese governments have been liquidating seized crypto assets to support public finances during an economic slowdown. Despite China’s mainland trading ban, sales are being routed through offshore channels, often using Hong Kong-based brokers and private firms that specialize in large over-the-counter transactions.
Who is the seller?
— MartyParty (@martypartymusic) December 17, 2025
There is substantial on-chain and analytical evidence suggesting that the Chinese government (primarily through local authorities) has sold off most of its 194000 seized Bitcoin, though no official confirmation from the Chinese government exists, and remaining…
A Reuters investigation published earlier this year documented this practice in detail. One firm alone reportedly handled more than $400 million in crypto asset sales since 2018. The proceeds are converted into yuan through banks, keeping the activity out of public view.
How Much Bitcoin Is Left?
This is where estimates diverge. Due to the lack of official disclosure, no one can say with certainty how much of the original stash remains. Some analysts estimate that roughly 15,000 BTC are still held from the initial 194,000 seized, while others believe the number could be lower or higher due to additional seizures linked to crypto-related crimes.
What matters more than the exact figure is the trend. A large, price-insensitive seller appears to have been active for an extended period. That fits the price action seen throughout 2025 far better than retail profit-taking or miner selling.
Analyst MartyParty summed it up bluntly, calling this seller “the missing piece that explains the daily sell pressure while institutions keep buying.”
Why This Explains the Market Behavior
This framework helps connect several dots that previously looked contradictory.
On one side, Bitcoin ETFs continue to absorb supply. Corporate buyers like Michael Saylor keep adding billions in BTC. Long-term holders are not distributing aggressively.
On the other side, price struggles to hold momentum. Every rally meets resistance without obvious fear or panic in the market.
A steady flow of government-linked selling explains that imbalance. These sellers are not trading charts. They are converting assets into cash. Timing matters less than execution.
MartyParty also noted that once this source of supply dries up, “the market no longer has an artificial weight pressing on it.”
Read also: Bitcoin (BTC) Price Is Crashing Again: Here’s What’s Driving the Dip
Why Some See This as Bullish
At first glance, government selling sounds bearish. In reality, markets care more about certainty than headlines.
If this supply is already being absorbed by ETFs, whales, and institutions, then the damage may already be done. When forced or non-economic selling ends, markets often snap back toward equilibrium.
That does not mean price moves straight up. It does mean one of the most persistent sources of pressure could soon disappear.
This also reframes the narrative around Bitcoin’s underperformance relative to traditional markets. It was not a lack of demand. It was excess supply from a single, opaque source.
If ETF inflows remain strong while sell pressure during specific time windows fades, that would support the thesis that this seller is nearly finished. If price starts holding gains instead of giving them back each morning, the shift will be obvious in hindsight.
Markets often look broken right before they reset. If this explanation holds, Bitcoin may have spent much of 2025 absorbing a once-in-a-cycle supply event rather than failing to attract buyers.
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