Bitwise CIO: Trump’s Crypto Reserve Will Be Larger & More Bitcoin-Focused Than Expected

TLDR

• Trump’s planned crypto reserve initially included multiple cryptocurrencies but will likely end up being mostly Bitcoin
• The market initially reacted negatively to the inclusion of altcoins, which Bitwise CIO Matt Hougan calls a misreading
• Bitwise predicts the reserve will be larger than people expect and held long-term, similar to gold reserves
• Other nations may follow the US in establishing strategic crypto reserves
• Even if political leadership changes, the reserve cryptocurrencies likely won’t be sold due to voter considerations

The United States is moving forward with plans to create a strategic cryptocurrency reserve that will likely end up being mostly Bitcoin, according to Bitwise Chief Investment Officer Matt Hougan.

The reserve, which was initially announced to include several altcoins, has faced mixed market reactions but may have a larger and more Bitcoin-focused composition than many expect.

President Donald Trump first announced on March 2 that the planned reserve would include Solana, XRP, and Cardano. He later added that Bitcoin and Ethereum would form “the heart” of the reserve. This announcement initially caused Bitcoin prices to jump before falling back below $83,000.

The inclusion of smaller cryptocurrencies beyond Bitcoin caused some concern in the crypto community. Many commentators believe Bitcoin is the only cryptocurrency suited for inclusion in a national reserve. Coinbase CEO Brian Armstrong has called Bitcoin “a successor to gold.”

The market’s reaction to the inclusion of multiple cryptocurrencies appears to have been negative. Hougan noted that “market participants have soured on the announcement because the proposed reserve holds more than Bitcoin.” He believes this reaction is misguided.

“The inclusion of speculative assets like Cardano feels more calculating than strategic,” Hougan said in a March 5 market note. He added that despite what he called a “flawed rollout,” the market is misinterpreting the situation.

Hougan predicts the reserve will ultimately focus on Bitcoin. “After the dust settles, I suspect the final reserve will be nearly entirely Bitcoin, and it will be larger than people think,” he stated. He believes the announcement should be seen as “bullish” for cryptocurrency markets.

Trump’s initial proposals are “rarely his final,” according to Hougan. Input from industry leaders at an upcoming White House crypto summit could change the composition of the reserve. Commerce Secretary Howard Lutnick has hinted that Bitcoin may receive special status.

Other cryptocurrencies may be “treated differently — positively, but differently,” according to Lutnick. This suggests a tiered approach to the reserve’s composition. The final structure may look quite different from what was initially announced.

There is also a small possibility that pushback could limit the reserve to assets the government has already seized. However, Hougan believes this is unlikely. The more probable outcome is a Bitcoin-focused reserve that is larger than market expectations.

Will Other Countries Follow?

If the United States creates a crypto reserve, other countries may follow suit. Hougan suggests that other nations will “look at wanting their own slice of Bitcoin.” This could further increase demand for the cryptocurrency globally.

Any cryptocurrencies purchased for the reserve will likely be held for a very long time. Hougan compares this to how the country holds its gold reserves. Political changes are unlikely to result in selling the reserve.

Even if a Democrat replaces Trump after his presidency, Hougan believes the reserve will remain intact. “Democratic leaders won’t want to alienate voters at little benefit to themselves,” he explained. This suggests the reserve could become a permanent feature of US financial policy.

Hougan noted that crypto has broad support. “There are a number of people who love crypto and a relatively small number who hate it,” he said. The 2024 election showed that the GOP’s support for crypto gained it many votes, while Democratic hostility gained few.

Bitcoin’s price has since recovered to above $90,000. This recovery was partly due to Trump delaying auto parts tariffs on Canada and Mexico. The price movements show how cryptocurrency markets remain sensitive to broader policy announcements.

Hougan believes the market’s initial positive reaction “strikes me as the right one.” He expects that “the market will eventually realize” the bullish nature of the strategic reserve announcement. The US government declaring crypto assets as “strategic” represents a fundamental shift in their status.