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Bitwise CIO anticipates Bitcoin to become a central component of US cryptocurrency reserves.
Bitwise CIO Matt Hougan contends that the market is misinterpreting the impact of former President Donald Trump’s proposed strategic crypto reserve, asserting that this initiative will ultimately be positive for digital assets despite initial fluctuations.
Hougan anticipates that the final reserve will primarily consist of Bitcoin (BTC) and is likely to be significantly larger than the market currently anticipates.
He also suggested that other nations may hasten their own Bitcoin acquisitions in response, and once obtained, the US is unlikely to liquidate its holdings for a considerable duration — if at all.
Market considerations
Trump’s announcement on March 2, detailing a reserve that includes digital assets beyond Bitcoin, initially caused BTC to surge from $85,000 to $95,000. However, by March 3, prices retracted as doubts regarding the inclusion of altcoins grew amid escalating geopolitical tensions.
According to Hougan, the sell-off was fueled by concerns that the reserve’s framework was more politically motivated than strategically sound, leading to negative sentiment in the market.
Some industry figures, including Coinbase CEO Brian Armstrong and Citadel Island Ventures co-founder Nic Carter, criticized the inclusion of speculative assets like Cardano (ADA). Bitwise CEO Hunter Horsley also supported a Bitcoin-only reserve, aligning with the prevailing market sentiment that such a decision would provide greater stability.
Nonetheless, Hougan maintained that the market is overreacting. He stated that the initial proposal has shifted the discourse, making a Bitcoin-only reserve a more plausible outcome.
According to Hougan:
“The confidence of the initial proposal has widened the Overton window.”
He further asserted that the announcement represents the first iteration of the proposal and is likely to evolve as the industry provides more feedback to the Trump administration.
Hougan added that regardless of any changes to the final version of the proposal, the fundamental concept of a government-backed reserve remains a long-term positive for the industry.
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Global ripple effects
Hougan also pointed out that this move could have wider geopolitical ramifications beyond the US, suggesting that other countries may now feel compelled to establish their own Bitcoin reserves — thereby accelerating global adoption.
Hougan remarked:
“El Salvador, Bhutan, and Abu Dhabi have already made strategic Bitcoin acquisitions. If you are Honduras, Mexico, or Guatemala, and you observe both El Salvador and the US taking action, can you afford to be left out? If you’re Dubai, Qatar, or Saudi Arabia, does Abu Dhabi’s initiative pressure you to respond?”
White House crypto advisor David Sacks is scheduled to host a Crypto Summit on March 7, where industry leaders are expected to advocate for a revised reserve structure. Sacks also recently disclosed that Trump will unveil additional details regarding the reserve during the summit.
Long-term policy implications
Hougan also addressed concerns that future administrations might reverse the policy, arguing that political realities render such a shift improbable.
He noted that crypto has substantial support among certain voter demographics, making it a challenging issue for Democrats to oppose outright.
According to Hougan:
“The GOP’s embrace of crypto garnered votes in the last election, while Democratic opposition yielded little. Any crypto acquired will likely be retained for an extended period, similar to the U.S. gold reserves.”
While the initial market reaction was mixed, Hougan asserted that the establishment of a US strategic crypto reserve signifies a pivotal moment.
Whether the final reserve encompasses multiple assets or becomes Bitcoin-only, the overarching implication is that the US government now regards crypto as a strategic asset — a position that could have enduring effects on global markets.
The post Bitwise CIO predicts Bitcoin likely to be predominant core of US crypto reserve appeared first on CryptoSlate.
