Countries experiencing high inflation face significant economic challenges, including the erosion of their currency’s purchasing power and difficulties in maintaining liquidity. In response, some of these countries have turned to selling Bitcoin reserves or increasing Bitcoin-related transactions as a way to raise cash and stabilize their economies. This trend is part of a broader shift where governments and sovereign wealth funds are increasingly holding Bitcoin as part of their reserves, reflecting a growing recognition of Bitcoin as a store of value and a hedge against inflation.
Several factors explain why countries with high inflation might sell Bitcoin to raise cash. First, Bitcoin has shown strong performance over recent years, delivering substantial real returns even after adjusting for inflation. For example, Bitcoin gained around 70% over the past year and has delivered a 1,250% real return over the last seven years, outperforming traditional assets like the S&P 500 Global index[1]. This performance makes Bitcoin an attractive asset for countries looking to diversify reserves away from traditional fiat currencies, especially the U.S. dollar, which some countries are trying to reduce reliance on.
Governments currently hold significant amounts of Bitcoin. The United States is the largest holder with nearly 2 million BTC, followed by China with about 194,000 BTC. Norway’s sovereign wealth fund has also increased its Bitcoin holdings by 83% in the second quarter of 2025[1]. These holdings indicate that Bitcoin is becoming part of official reserve strategies, potentially to counter inflationary pressures and currency depreciation.
In countries with high inflation, the local currency loses value rapidly, making it difficult for governments to maintain liquidity and fund public services. Selling Bitcoin reserves can provide a source of cash without resorting to printing more money, which would worsen inflation. This strategy is particularly relevant in emerging markets and countries facing currency crises. For instance, Argentina has seen a 16-fold increase in crypto mobile wallet usage over the past three years amid an escalating currency crisis, suggesting that citizens and possibly governments are turning to cryptocurrencies as alternatives to unstable local currencies[5].
The macroeconomic environment also plays a role. Inflation and interest rate outlooks influence demand for Bitcoin. Policymakers project rate cuts and moderate inflation in 2025, which tends to increase demand for scarce assets like Bitcoin. The 2024 Bitcoin halving, which reduced new Bitcoin supply by half, further tightens supply and supports higher valuations[3]. This scarcity, combined with inflationary pressures, encourages countries and investors to hold or sell Bitcoin strategically to manage cash flow and preserve value.
However, the decision to sell Bitcoin reserves is complex. While Bitcoin can be a hedge against inflation, it is also highly volatile. Its price can fluctuate significantly, which poses risks for countries relying heavily on it for liquidity. For example, Bitcoin’s historical volatility remains high at around 43%[1]. This volatility means that selling Bitcoin at the right time is crucial to maximize cash raised and avoid losses.
Moreover, the use of Bitcoin varies by region. In developed countries, crypto activity often centers on trading and speculation, while in emerging markets, it is more about remittances and as a store of value against inflation and currency instability[5][6]. This difference affects how governments approach Bitcoin holdings and sales.
In summary, countries with high inflation are increasingly considering Bitcoin as part of their financial strategies. Selling Bitcoin reserves can provide much-needed cash without exacerbating inflation through money printing. The growing institutional adoption of Bitcoin by sovereign wealth funds and governments reflects its rising importance as a global store of value. However, the volatility of Bitcoin and the varying uses of crypto across regions mean that this approach requires careful management and timing to be effective.