Last week, US President Donald Trump made headlines by formally establishing a strategic Bitcoin reserve, a decision that has elicited a mix of celebration and concern within the cryptocurrency industry. At the center of this discussion is a pivotal question: Will Bitcoin ascend to a status akin to gold as a geopolitically significant macro asset, or will it remain a niche holding primarily for libertarians, cypherpunks, and speculative investors?
This question is the key takeaway from Bitwise’s latest investor memo, penned by Chief Investment Officer Matt Hougan. Dated March 10, 2025 and titled “The Only Question That Matters in Bitcoin,” the memo highlights how Bitcoin’s long-term trajectory may depend on whether nations—starting with the United States—recognize its value enough to build strategic reserves.
The One Central Question for Bitcoin
In his memo, Hougan reflects on the remarkable nature of the US government’s decision: “Fifteen years after Bitcoin was created—a decade and a half of skepticism and derision, where it was derisively dubbed a ‘pet rock’ and ‘rat poison squared’—the United States has declared Bitcoin a ‘strategic’ asset that ‘shall not be sold.’”
He posits that the endorsement of Bitcoin as a strategic reserve asset marks a significant turning point: “This is a historic milestone that, over time, will help propel Bitcoin to new all-time highs. Congratulations to all who saw this possibility long before it became fashionable.”
However, the market’s reaction has not been universally positive. The federal government’s formal recognition might seem to bolster Bitcoin’s legitimacy, yet it left some investors disappointed who anticipated an immediate surge in government purchases.
Following the announcement, Bitcoin’s price experienced a sharp decline, plummeting 13% from its recent peak of over $92,000 and dropping below $80,000 for the first time since November 2024. Hougan attributes this backlash to various factors: broader economic uncertainties, a pullback in the equity market, and significantly, a “misunderstanding” of the government’s actual position.
“Despite the groundbreaking nature of this declaration, Bitcoin has seen a notable decline in recent days,” he notes. Investors had expected significant purchases from the US Treasury; instead, they discovered that the reserve would initially consist of the government’s existing Bitcoin holdings—approximately 200,000 BTC valued at around $16 billion based on current prices.
Hougan contends that the market’s pessimistic response is unwarranted, emphasizing that the government’s decision to hold these 200,000 Bitcoins instead of selling them—something that had been anticipated under the previous administration—removes a significant overhang from the market.
Furthermore, the newly issued executive order clearly states that “[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 analysis, Hougan underscores the significance of the term “shall,” suggesting it represents a mandate rather than just an option. Ultimately, Bitwise’s memo emphasizes a long-term viewpoint, urging investors to concentrate on what Hougan identifies as “the only question that matters in Bitcoin.” This question revolves around whether Bitcoin will achieve global importance, similar to gold, or if it will remain an afterthought.
As Hougan succinctly puts it, “If Bitcoin does matter globally, I believe it will become a $10-50 trillion asset, representing a 5x-25x return from current prices. If it doesn’t matter, it will be a mere footnote in history, fluctuating under $150,000, supported solely by a small group of libertarians, cypherpunks, and speculators. There is no middle ground.”
From this perspective, the US government’s decision to maintain (and potentially expand) its Bitcoin holdings sends a powerful signal to other nations. If, as Hougan suggests, countries including Czechia, Russia, China, El Salvador, and India are contemplating their own strategic moves regarding digital assets, the US adopting Bitcoin as a strategic resource could prompt them to follow suit—especially if they seek to stay ahead of any further American acquisitions.
While some investors might feel disillusioned by the immediate lack of massive government purchases, Bitwise’s memo remains optimistic despite Bitcoin’s recent volatility. Hougan regards the present price dip as an opportunity for those with a longer-term perspective. “One key takeaway is clear: this short-term weakness is a gift,” he concludes.
As of the time of this report, BTC is trading at $80,319.
