The US government established a Strategic Bitcoin Reserve using confiscated Bitcoins. However, markets were shaken by this announcement as active Bitcoin purchases by the government were expected. Prices plummeted by more than $5,000, prompting investors and industry experts to discuss the long-term impacts of this move.
On March 6, 2025, the US government signed an executive order to establish the Strategic Bitcoin Reserve (SBR). However, this development did not have the positive impact expected in the market, and the Bitcoin price, after dropping to $88,300 from $5,000, further fell deep on March 8, reaching $86,000 at 10:30 (Turkey time). Crypto investor and host of the Wolf of All Streets podcast, Scott Melker, analyzed the price movement and the long-term effects of the reserve.
US’s New Digital Asset Policy
In the summer of 2024, Donald Trump announced at the Nashville Bitcoin Conference that the US government would create a Bitcoin reserve. It was expected that Trump would implement this plan as soon as he took office. However, he did not mention cryptocurrencies in his inaugural speech, causing disappointment among investors as he only focused on pardoning Silk Road founder Ross Ulbricht.
After months of speculation, the Trump administration announced that the government would not buy Bitcoin actively but would create a stock from confiscated Bitcoins. This was substantially different from Senator Lummis’s anticipated active Bitcoin buying strategy. The government’s reserve would grow with only seized and confiscated assets and not with taxpayers’ funds.
Moreover, on the same date, another initiative called Digital Asset Stockpiles was launched. This stock would include other major crypto assets like Ethereum (ETH), Cardano (ADA), Solana (SOL), and Ripple (XRP). However, some critics suggested that David Sacks, appointed as the White House’s crypto czar, could indirectly benefit from these reserves. Sacks vehemently denied these claims.
“It Will Rise Again in the Long Term”
Prior to the announcement of the Strategic Bitcoin Reserve, many investors expected the government to make active Bitcoin purchases in the market. Instead, it was announced that only confiscated Bitcoins would be held. This led to a sharp price drop as it did not align with investor expectations.
Scott Melker positively viewed this development in the Wolf Den newsletter, calling it a success and referring to the recognition of Bitcoin as a strategic asset by the US as the “largest step in the US’s Bitcoin journey.” According to Melker, the US cannot afford to lag behind China in terms of Bitcoin reserves and this move will trigger global competition, increasing demand for Bitcoin worldwide.
Reflecting on the short-term drop in Bitcoin price, Melker noted that it was a clearing of leveraged trades triggered by significant news in a low-liquidity market. In his view, major investors would perceive this drop as a buying opportunity, and the price would rise again in the long term.
Generally Received Positively
Following the announcement of the Strategic Bitcoin Reserve details, the crypto community had mixed reactions. Particularly, the decision not to buy Bitcoin but only store confiscated assets was met with disappointment by some investors. Jeff Park from Bitwise Invest criticized the executive order, saying, “This was not a strategic move but a big pump-and-dump operation, and I’m glad it’s over.”
On the other hand, crypto supporters generally viewed this decision positively. Senator Lummis expressed her support for the initiative despite her plan not being implemented. However, she criticized Congress’s exclusion from the process.
A Bitcoin investor known as the “Bitcoin Therapist” on social media platform X described this executive order as the “most optimistic news seen in the past four years.” According to him, the US’s move will accelerate Bitcoin’s long-term global acceptance.
US’s Reserve Could Redefine Global Finance
The US government’s recognition of Bitcoin as a strategic asset and the establishment of a reserves consisting of confiscated Bitcoins resonated in the global financial world. Ryan Rasmussen, Head of Research at Bitwise Asset Management, said that this move would accelerate the adoption of Bitcoin, increase its legitimacy, and eliminate fears of government pressure.
Could Trigger Global Competition
In his statement on March 7, Rasmussen noted that the US’s Bitcoin reserve could lead to profound changes in the global financial system. He mentioned that this move would create a ripple effect and direct other governments, financial institutions, and investment funds to create similar Bitcoin reserves.
Rasmussen suggested that establishing a Bitcoin reserve would gain international acceptance and lead other countries to start accumulating BTC. The official recognition of Bitcoin as a strategic asset by the US, according to him, would pave the way for it to be embraced by other nations and integrate Bitcoin more deeply into the global financial system.
Additionally, Rasmussen believed that the financial sector would undergo significant changes. The US government holding Bitcoin could serve as a reference point for wealth managers, retirement funds, and financial institutions. It is noted that these institutions, which have been cautious about Bitcoin due to regulatory uncertainty so far, may increase their interest in the cryptocurrency market due to this government move.
Concerns About Price Volatility
Some investors in the market are concerned that selling US-held Bitcoins could create price instability. However, Rasmussen argued that the government would continue to accumulate Bitcoin and this would boost trust in the asset in the long term. He emphasized that the possibility of the US government banning Bitcoin is now “definitely zero.”
Chief Investment Officer (CIO) of Bitwise, Matt Hougan, shared similar views with Rasmussen. Hougan believed that if the US recognized Bitcoin as a strategic asset, other countries would follow suit, and a global Bitcoin race could begin.
In a statement on March 4, Hougan pointed out that countries like El Salvador, Bhutan, and Abu Dhabi were already buying Bitcoins, and many nations were following this process closely. He emphasized the inevitability of a global trend of creating Bitcoin reserves by asking, “If you are Honduras, Mexico, or Guatemala and now see that the US is also buying Bitcoin, can you continue with zero Bitcoin?” thus suggesting a global trend of creating Bitcoin reserves.
A Strategic Move by Trump
US President Donald Trump signed a presidential decree on March 6 to establish a Strategic Bitcoin Reserve using the government’s crypto assets. White House crypto czar and investor David Sacks announced that the reserve would consist of Bitcoins seized through criminal and legal asset forfeiture cases.
In a statement on X, Sacks confirmed that the government would not initially buy more Bitcoin but left the door open for new purchases in the future. He highlighted that the US government currently holds about 200,000 Bitcoins valued at $17.9 billion.
A statement by the White House authorized the Commerce and Treasury Departments to develop new strategies to acquire more Bitcoin as long as it did not impose additional costs on American taxpayers.
A New Era Begins
The creation of the US Bitcoin reserve received mixed reactions in the market. While some investors viewed the government’s lack of direct Bitcoin purchases as disappointing, many industry experts believed that this move would have significantly positive long-term effects.
With this development, it became clear that Bitcoin is being acknowledged as a strategic asset not only for individual and institutional investors but also for states. The US’s move could fundamentally change Bitcoin’s role in the global economy and lead other countries to adopt similar policies.