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The US President Donald Trump has formally established a strategic Bitcoin reserve final week—an motion that has ignited each celebration and concern throughout the business. On the coronary heart of this debate is one central query: Will Bitcoin turn into a geopolitically vital world macro asset like gold, or will it stay a distinct segment holding amongst libertarians, cypherpunks, and speculators?
That’s the core takeaway from Bitwise’s newest investor memo, authored by Chief Funding Officer Matt Hougan. Titled “The Solely Query That Issues in Bitcoin” and dated March 10, 2025, the memo underscores how the long-term prospects of Bitcoin might hinge on whether or not governments worldwide—beginning with america—view it as indispensable sufficient to maintain constructing strategic reserves.
The One Massive Query For Bitcoin
Within the memo, Hougan highlights the putting nature of the US authorities’s resolution, writing: “Fifteen years after Bitcoin was created—a decade and a half of ridicule and skepticism, of individuals calling it a ‘pet rock’ and ‘rat poison squared’—the US authorities declared Bitcoin a ‘strategic’ asset that ‘shall not be offered.’”
He argues that Bitcoin’s endorsement as a strategic reserve asset alerts a historic shift: “It’s a historic milestone, which in time will assist propel Bitcoin to new all-time highs. Congratulations to all who believed on this risk earlier than it was cool.”
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But, markets haven’t uniformly welcomed this announcement. Whereas the federal government’s formal recognition would appear to bolster Bitcoin’s legitimacy, it additionally disillusioned some traders who had anticipated a direct inflow of recent authorities purchases.
Shortly after the reserve information emerged, Bitcoin’s value plummeted 13% from its current excessive of over $92,000, dropping under $80,000 for the primary time since November 2024. Hougan factors to a number of contributing elements: broader financial worries, an fairness market pullback, and, crucially, what he calls a “misunderstanding” of the federal government’s precise stance.
“Regardless of the historic nature of the declaration, Bitcoin is down sharply in current days,” he notes within the memo. Traders had apparently hoped for rapid large-scale purchases from the US Treasury. As a substitute, they discovered that the reserve would initially comprise the federal government’s current Bitcoin holdings—an estimated 200,000 BTC, price roughly $16 billion at present costs.
Hougan believes the market’s damaging response is unwarranted, emphasizing that merely retaining these 200,000 Bitcoin as an alternative of promoting them—as soon as anticipated below the prior administration—removes a considerable overhang from the market.
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Furthermore, the brand new government order explicitly states: “[T]he Secretary of the Treasury and the Secretary of Commerce shall develop methods for buying extra Authorities BTC supplied that such methods are funds impartial and don’t impose incremental prices on United States taxpayers.”
In his memo, Hougan underscores the importance of the phrase “shall,” suggesting it signifies a mandate reasonably than a mere risk. Above all, Bitwise’s memo insists on a long-term perspective, urging traders to focus on what Hougan phrases “the one query that issues in Bitcoin.” That query is whether or not Bitcoin turns into globally vital, akin to gold, or whether or not it stays peripheral.
“If Bitcoin does matter globally, right here’s my view: Will probably be a $10-50 trillion asset, implying a 5x-25x return from present costs. If it doesn’t, it’ll be a footnote in historical past, bouncing round under $150,000, supported solely by a small cohort of libertarians, cypherpunks, and speculators. There is no such thing as a in between. Bitcoin both issues globally or it doesn’t,” Hougan writes.
From this vantage level, the US authorities’s option to retain (and probably develop) its Bitcoin holdings represents an infinite sign to different international locations. If, as Hougan suggests, nations together with Czechia, Russia, China, El Salvador, and India are weighing their very own strategic strikes within the digital asset house, the US adopting Bitcoin as strategic may spur them to comply with go well with—particularly in the event that they need to front-run any additional American acquisitions.
Whereas some traders could also be disheartened by the rapid lack of massive government buys, Bitwise’s memo stays optimistic within the face of Bitcoin’s current volatility. Hougan labels the present value dip as a possibility for these eyeing an extended timeline. “I see one massive takeaway. This short-term weak spot is a present,” he concludes.
At press time, BTC traded at $80,319.
Featured picture created with DALL.E, chart from TradingView.com