Author: Matt Hougan, Chief Investment Officer of Bitwise; 0xjs@Golden Finance

A strange thing happened in the past few days.

On Sunday, President Trump announced that the United States of America would create a strategic cryptocurrency reserve that holds five crypto assets: Bitcoin, Ethereum, Solana, XRP and ADA.

After the news came out, the market initially rose sharply, and the price of Bitcoin immediately jumped from $85,000 to $95,000. But as Sunday passed, by Monday, the market began to fall. As I wrote this memorandum, Bitcoin and other assets mentioned in the announcement not only gave up all the gains, but even fell more.

Crypto assets rise first and then fall after the reserve announcement is released

Data source: Bitwise Asset Management, data comes from CoinGecko. The data range is from February 27 to March 3, 2025.

You may ask: Why is this happening? Isn’t this good news?

The short answer is "is good news", I will explain in detail later. But this is not what the market presents. Instead, market participants were negative about the announcement because the proposed reserves contained more than just Bitcoin.

In particular, speculative assets like ADA are included in it feel more like they are calculated rather than strategic considerations.

Several well-known figures in the cryptocurrency sector have questioned the reserve and the inclusion of non-bitcoin assets. (See tweets from Coinbase CEO Brain Armstrong and Castle Island founder Nic Carter.) At Bitwise, we also believe that the best form of reserves should include only Bitcoin, as our CEO Hunter Horsley wrote on Sunday.

Although the introduction of this initiative is flawed, I think the market interpretation is wrong. Ultimately, this is good news, and I think the market will agree with this view sooner or later.

The following are three points that I think the market ignores:

Point 1: The initial proposal is not the final plan

So far, one thing we have learned is that Trump's initial proposal is rarely the final plan. This is the case with the tariff issue, and it is likely that the same is true here.

In the next few days, cryptocurrency industry bigwigs will express their views on this reserve plan. For example, on Friday, White House cryptocurrency Tsar David Sacks will host a cryptocurrency summit with industry leaders at the White House, and I guess the proposed reserves will be a key issue.

It is possible that the objection to this announcement was so loud that the wholeThe reserve plan was cancelled, or may be limited to assets previously held by the United States through forfeiture of proceeds. But I doubt it.

In fact, I think the initial level of boldness proposed has broadened the "Overton window" about reserves (referring to the scope of choice that the public can accept at any time). The idea of ​​building a strategic cryptocurrency reserve seems unlikely to come true until Sunday. And now, the reserves that only include Bitcoin sound almost conservative.

When the dust settles, I expect the final reserves will be almost entirely composed of Bitcoin and will be larger than people think.

Point 2: Others More likely to follow up on buying

When the market is concerned about the US's response to a proposal containing five assets, it is important to remember that the most important audience for this message is not in the US, but abroad.

Some Bitcoin supporters are excited about the idea of ​​building strategic bitcoin reserves in the United States because they expect it to trigger a global race. Countries will prepare for Bitcoin to become an important monetary asset around the world.

Assuming that the U.S. reserve plan is implemented in some form, it is hard to imagine that others will not follow suit. This is already an emerging trend: El Salvador, Bhutan and Abu Dhabi have all bought bitcoins publicly, and there are rumors that others are buying as well.

If you are in Honduras, Mexico or Guatemala, and seeing El Salvador and the United States now buying Bitcoin, can you really afford to hold zero? If you are Dubai, Qatar or Saudi Arabia and see Abu Dhabi and the United States seize the lead, can you feel at ease? What will Russia react?

Last week's announcement—although not perfect—marks the first time the United States has identified Bitcoin as a strategic asset. As long as this remains the same, in my opinion, it is a game-changing event.

Point 3: Once cryptocurrencies are bought, they are likely not to be sold. Some observers are worried that establishing strategic cryptocurrency reserves during Trump's presidency will lead to a cycle of buying and selling fluctuations as elections change. When Trump leaves office four years later, will Democrats sell cryptocurrencies held by the United States?

In my opinion, this is unlikely to happen. In the United States, people’s enthusiasm for cryptocurrencies is uneven: there are quite a few people who love cryptocurrencies, while relatively few people hate it. We learned from the last election that Republican support for cryptocurrencies won it many votes, while Democrats’ hostility to cryptocurrencies did not bring much benefit. I suspect that any cryptocurrency purchased will be held for a long time, just like the U.S. gold reserves. Democratic leaders don’t want to alienate voters when they don’t do them much.

Conclusion

It is frustrating that cryptocurrencies have a hard time achieving pure victory today. If Sunday's announcement "just" was about building strategic Bitcoin reserves, I think the market would be higher. AnnouncementInclusion of assets with smaller market capitalization unnecessarily complicates things. The biggest risk may be that the market is so disgusted with the proposal that the simplified reserve plan that only Bitcoin has been cancelled.

But I don't think this is likely to happen. So far, Trump seems to stick to his goal, and I expect some version of this proposal to advance eventually. And, while the launch process and specific details are not perfect, I suspect the final version will be pretty good.

After all, I think the market's initial reaction was correct: the United States' identification of crypto assets as "strategic assets" is good news. I think the market will eventually recognize this.