The cryptocurrency market has been abuzz with speculation and uncertainty following former President Donald Trump’s proposal for a strategic crypto reserve. Bitwise CIO Matt Hougan believes that the market’s reaction has been misguided, and that the initiative could ultimately have a positive impact on digital assets.
Hougan predicts that the reserve will largely consist of Bitcoin (BTC) and could be much larger than anticipated. He also suggests that other countries may follow suit and acquire Bitcoin in response to the US’s actions. Furthermore, once acquired, the US is unlikely to sell its holdings for a significant period of time, if ever.
The announcement of the strategic crypto reserve initially caused Bitcoin’s price to surge, but subsequent skepticism about the inclusion of altcoins led to a price retracement. Some industry leaders, such as Coinbase CEO Brian Armstrong and Castle Island Ventures co-founder Nic Carter, expressed concerns about including speculative assets like Cardano (ADA). Bitwise CEO Hunter Horsley advocated for a Bitcoin-only reserve, echoing the sentiment of many in the market.
Despite the initial backlash, Hougan believes that the market is overreacting and that the proposal has opened up the possibility of a Bitcoin-only reserve. He suggests that the conversation will continue to evolve as the industry provides feedback to the Trump administration.
Hougan also highlights the potential global implications of the US establishing a strategic crypto reserve. He argues that other countries may feel pressured to acquire Bitcoin, leading to accelerated global adoption of the cryptocurrency.
The upcoming Crypto Summit hosted by White House crypto advisor David Sacks is expected to provide more details about the reserve and allow industry leaders to offer input on its structure.
Addressing concerns about potential policy reversals by future administrations, Hougan asserts that the strong support for crypto among certain voter demographics makes it unlikely for the policy to be reversed. He suggests that any crypto purchased by the government will likely be held for an extended period, similar to the US’s gold reserves.
In conclusion, Hougan believes that the creation of a US strategic crypto reserve marks a significant milestone for the industry. Whether the final reserve includes multiple assets or becomes Bitcoin-only, the US government’s recognition of crypto as a strategic asset could have long-lasting effects on global markets.