Bitwise Cautions That Market is Missing Three Essential Positive Aspects of Trump’s Cryptocurrency Reserve Proposal

Despite the debate surrounding Trump’s suggested allocation for a US crypto reserve, Bitwise CIO Matt Hougan asserts that the “market has this fallacious.”

While Bitcoin, Ethereum, Solana, XRP, and Cardano experienced a surge after being identified as reserve assets, the increase quickly faded into a “sell the news” scenario, resulting in a sharp correction.

As of today, Bitcoin and other prominent altcoins have retraced most, if not all, of their gains.

In a note to clients addressing the pump-and-dump reaction, Hougan contended that market participants became disillusioned with the announcement by “overthinking” the token allocation.

Reasons for Market Concerns Regarding Trump’s Crypto Reserve Plans

Hougan attributed the lackluster market reaction to the perception that “speculative assets like Cardano seem more calculated than strategic.”

Some analysts are uncomfortable with the idea of potentially utilizing taxpayer money to support the value of crypto, a speculative digital asset with limited intrinsic value.

Commenting on X, Euler Lab CEO Michael Bentley suggested that there’s a “strong likelihood this is abandoned when it becomes clear US taxpayers are merely exit liquidity for ADA holders.”

He further stated that “Bitcoin could also be affected similarly, rendering it a net negative policy in the long run.”

#Bitcoin may be up but it’s a sad day for America if they truly endorse shitcoin at a nation-state level. I can’t say I’m surprised though, considering Trump has launched a memecoin.
Hypershitcoinization awaits.

— Samson Mow (@Excellion) March 2, 2025

Others viewed the crypto reserve plans with cautious optimism. On X, Coinbase CEO Brian Armstrong expressed he was “eager to learn more,” but remarked, “just Bitcoin would likely be the best option.”

“Despite the flawed rollout, I believe the market is misinterpreting things. In the long run, this is bullish,” Hougan stated, outlining three aspects he thinks the market is still overlooking.

3 Bullish Reasons the ‘Market Has This Wrong’

Hougan first pointed out that this isn’t the final proposal, reflecting on Trump’s negotiation style—whether concerning geopolitical conflicts, tariffs, or a US crypto reserve.

He speculated that the boldness of the initial proposal might serve as a negotiation tactic by President Trump.

Until Sunday, the very notion of a strategic crypto reserve seemed improbable. Now, a bitcoin-only reserve appears almost conservative.

However, he did express caution that the backlash could be significant enough for the entire concept of the reserve to be abandoned or limited to assets already held through seizure.

Secondly, he credited the global adoption of Bitcoin as a reserve asset as the true reason a US reserve is so bullish, citing its potential to “ignite a global race.”

The second factor Hougan emphasized is the speculation that an American reserve would trigger a worldwide accumulation race as countries position themselves for “the emergence of bitcoin as a globally significant financial asset.”

This week’s announcement—as imperfect as it is—marks the first time the U.S. has ever acknowledged that bitcoin is a strategic asset. As long as that remains, it seems like a game-changer to me.

Finally, Hougan dismissed concerns that even if the Republican President successfully establishes a reserve, Democrats might sell off the reserve if they regain power.

He argued that once acquired, the crypto reserve assets would likely outlast Trump’s term and not be sold, regardless of the political alignment of the incoming administration.

We learned this in the last election, where the GOP’s outreach to crypto garnered it many votes while Democratic opposition attracted few.

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