The U.S. Bitcoin Reserve: Monumental in Theory, Muted in Impact

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Crypto policy and sentiment in the U.S. have completely reversed in the past 60 days. And yes, the velocity of support has frankly been faster than many anticipated when Donald Trump was first inaugurated. In just two months, the administration has established a Crypto Working Group via Executive Order, hosted an inaugural Digital Asset Summit, and enacted two crypto reserves, making it a historic period for the asset class here in the U.S.

Through a historic Executive Order, Donald Trump established the Strategic Bitcoin ("BTC") Reserve and U.S. Digital Asset Stockpile. On one hand, this is the credibility and validity that Bitcoin and its peer set justifiably deserve. After restrictive policies like Chokepoint 2.0 and the controversial SAB 121, the U.S. appears to be repositioning itself as a global leader in crypto.

On the other hand, crypto markets had lofty expectations of the reserve and speculative rumors of its structure fueled a retail-driven buying frenzy leading up to its announced launch. Following news of the Executive Order, crypto assets immediately retraced and have since faced continued downward pressure on the shoulders of a softening macro backdrop, plagued by a number of uncertain variables such as tariffs, slowing economic growth, and a sticky cost of capital driven by a pause in interest rate cuts by the Federal Reserve.

So let's dive into 3 Key Implications of the Executive Order:

1) No New Net Purchases of Crypto (for now)

Two different Crypto Reserves were announced

A. The Strategic Bitcoin Reserve

B. Digital Asset Stockpile

Both the Reserve and Stockpile will be capitalized with existing Bitcoin and other cryptocurrencies already owned by the U.S. Government, which were seized over the years from criminal and illicit activity. The U.S. Government is estimated to already hold ~200,000 BTC (~$18 billion) (source: Glassnode). This essentially means that the U.S. Government has temporarily suspended its ability to sell crypto, but doesn't immediately create orders to buy. Key takeaway, no net new purchases.

Note: Over the past decade, the U.S. Government had sold 195K BTC for ~$366 million, which would now be worth ~$17 billion.

On the bright side, the Executive Order does direct The Secretaries of Treasury and Commerce to explore budget-neutral strategies for acquiring additional Bitcoin, so long as these purchases don't cost taxpayers. Realistically, this means the government can potentially sell assets from other reserves to purchase more Bitcoin, but we don't know the timeline or efficacy of this initiative.

Note: Although only 0.14% of on-chain crypto activity is now coined as "illicit" (source Chainalysis), it was once a common currency for criminals. Just like pirates once treasured gold, criminals mistakenly treasured Bitcoin; only to learn Bitcoin's open source ledger acts as an eternal paper trail of one's transaction history.

2) Grander Expectations Were Already Priced In

According to on-chain predictions platform, Polymarket, famously known for predicting the election outcome ahead of the traditional media, favored

the chances of a U.S. National Reserve being created in 2025 at -154, so if you're confused why the value of BTC fell on the announcement, it's because the market already anticipated a green light for the Reserve, and in my humble opinion, it didn't meet expectations.

Just last Sunday (3/2/25), Donald Trump announced on Truth Social his plans to establish a U.S. Crypto Reserve, which notably proposed the naming of 5 blockchain cryptocurrencies: Bitcoin ("BTC"), Ethereum ("ETH"), XRPL ("XRP"), Solana ("SOL"), and Cardano ("ADA").

Although Trump named a few additional cryptocurrencies in his post, there was no explicit mention of which cryptocurrencies are being held by the Government today other than BTC.

Subsequently, the Executive Order fully protects Bitcoin and leaves the door open for future acquisitions, but doesn't state the same for other assets. The Executive Order states "the government will not acquire additional assets for the Stockpile beyond forfeiture proceedings" and gives the Secretary of Treasury , under responsible stewardship, the ability to order "potential sales from the U.S. Digital Asset Stockpile".

3) The U.S. Commitment to Long-Term Crypto Strategy

$USD = Your Money / (∞)

Bitcoin = Your Money / 21,000,000

The United States typically leads by example, and we are now one of the first nations to create a formalized Strategic Bitcoin Reserve. El Salvador took the world by storm first, and we now know nations like the United Arab Emirates have followed suit after it was revealed the Abu Dhabi Soverign Wealth Fund owned $460 million in Bitcoin through their purchase of BlackRock's IBIT BTC ETF.

Although considered a bag of mixed reviews in the short-term, the establishment of the reserve has larger implications for the future, as the game theory of Bitcoin begins to play out on a global scale.

With only 21 million Bitcoin in existence, the opportunity to participate in the digital gold rush may soon accelerate. Just this past week, the State of Texas passed its own Strategic Bitcoin Reserve after the vote cleared the Senate 25-5 and I expect this trend to continue both at the domestic and international level.

The U.S. government has officially dealt its hand, becoming increasingly focused on creating a sustainable and forward-thinking approach to cryptocurrency. From here, I expect to see a pair of crypto legislation (Stablecoin Bill, FIT21) move through Congress, establishing a framework that ensures both innovation and regulation can coexist. This long-term commitment is shaping the future of the digital asset landscape, and I look forward to the United States finally grabbing a seat at the table.

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Boomer Saraga | Crypto Investment Manager 

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