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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 trade. At the center of this debate is one central query: Will Bitcoin develop into a geopolitically essential world macro asset like gold, or will it stay a distinct segment holding amongst libertarians, cypherpunks, and speculators?
That is the core takeaway from Bitwise’s newest investor memo, authored by Chief Investment Officer Matt Hougan. Titled “The Only Question That Matters 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 the United States—view it as indispensable sufficient to maintain constructing strategic reserves.
The One Big Question For Bitcoin
In the memo, Hougan highlights the placing nature of the US authorities’s resolution, writing: “Fifteen years after Bitcoin was created—a decade and a half of ridicule and skepticism, of people calling it a ‘pet rock’ and ‘rat poison squared’—the US government declared Bitcoin a ‘strategic’ asset that ‘shall not be sold.’”
He argues that Bitcoin’s endorsement as a strategic reserve asset indicators a historic shift: “It is a historic milestone, which in time will help propel Bitcoin to new all-time highs. Congratulations to all who believed in this possibility before it was cool.”
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Yet, markets haven’t uniformly welcomed this announcement. While the federal government’s formal recognition would appear to bolster Bitcoin’s legitimacy, it additionally dissatisfied some buyers who had anticipated a direct inflow of recent authorities purchases.
Shortly after the reserve information emerged, Bitcoin’s worth plummeted 13% from its latest excessive of over $92,000, dropping under $80,000 for the primary time since November 2024. Hougan factors to a number of contributing components: broader financial worries, an fairness market pullback, and, crucially, what he calls a “misunderstanding” of the federal government’s precise stance.
“Despite the historic nature of the declaration, Bitcoin is down sharply in recent days,” he notes within the memo. Investors had apparently hoped for instant large-scale purchases from the US Treasury. Instead, they discovered that the reserve would initially comprise the federal government’s current Bitcoin holdings—an estimated 200,000 BTC, value roughly $16 billion at present costs.
Hougan believes the market’s destructive response is unwarranted, emphasizing that merely retaining these 200,000 Bitcoin as an alternative of promoting them—as soon as anticipated beneath the prior administration—removes a considerable overhang from the market.
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Moreover, the brand new government order explicitly states: “[T]he Secretary of the Treasury and the Secretary of Commerce shall develop strategies for acquiring additional Government BTC provided that such strategies are budget neutral and do not impose incremental costs on United States taxpayers.”
In his memo, Hougan underscores the importance of the phrase “shall,” suggesting it signifies a mandate somewhat than a mere chance. Above all, Bitwise’s memo insists on a long-term perspective, urging buyers to focus on what Hougan phrases “the only question that matters in Bitcoin.” That query is whether or not Bitcoin turns into globally essential, akin to gold, or whether or not it stays peripheral.
“If Bitcoin does matter globally, here’s my view: It will be a $10-50 trillion asset, implying a 5x-25x return from current prices. If it doesn’t, it’ll be a footnote in history, bouncing around below $150,000, supported only by a small cohort of libertarians, cypherpunks, and speculators. There is no in between. Bitcoin either matters globally or it doesn’t,” Hougan writes.
From this vantage level, the US authorities’s option to retain (and probably broaden) its Bitcoin holdings represents an infinite sign to different nations. 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 might spur them to observe go well with—particularly in the event that they wish to front-run any additional American acquisitions.
While some buyers could also be disheartened by the instant lack of massive government buys, Bitwise’s memo stays optimistic within the face of Bitcoin’s latest volatility. Hougan labels the present worth dip as a possibility for these eyeing an extended timeline. “I see one big takeaway. This short-term weakness is a gift,” he concludes.
At press time, BTC traded at $80,319.
Featured picture created with DALL.E, chart from TradingView.com
