A controversial proposal circulating among Bitcoin Core contributors to freeze coins that have not moved for more than five years is escalating into the most divisive policy debate the network has faced since the 2017 block-size war. Galaxy Digital head of research Alex Thorn warned in a Sunday client note that any consensus change targeting the estimated 5.6 million dormant bitcoin could trigger "the worst single-day repricing the asset has ever experienced," with risk to a 25% to 40% drawdown if implemented without clear opt-out mechanisms.
Bitcoin (BTC) traded at $77,946 in Sunday Asia hours, up 0.4% on the day but down 6.1% over the past week as headline risk piled up. The dormant supply at the heart of the debate represents roughly 27% of the 21 million eventual cap and includes a significant share of coins attributed to Bitcoin's pseudonymous creator Satoshi Nakamoto.
Why the Idea Is Surfacing Now
The proposal, framed publicly as a quantum-resistance upgrade, would migrate dormant outputs to a post-quantum signature scheme — and forfeit any coins not migrated within a defined window. Proponents argue that pre-emptive migration shields the network from future quantum attacks on legacy P2PK and reused P2PKH addresses. Critics counter that confiscation by code violates Bitcoin's core property-rights guarantee.
Coin Metrics estimates the affected balances at $437 billion at current spot prices, of which roughly 1.1 million coins are believed lost to forgotten keys. The remainder belongs to long-term holders, including early miners and corporate treasuries with multi-year cold-storage policies.
Market Impact Already Visible
Open interest in CME bitcoin futures fell 9% over the past three sessions to $34 billion, while Deribit put-skew on three-month options widened to its steepest reading since the FTX collapse. The MVRV-Z score, a measure of unrealized profit, slipped from 3.1 to 2.4 — a textbook sign of profit-taking by short-term holders. ETF flows were mixed, with BlackRock's iShares Bitcoin Trust (