US President Donald Trump’s proposed cryptocurrency reserve, while initially featuring a number of large-market cap altcoins, will ultimately consist almost “entirely of Bitcoin,” according to Matt Hougan, the chief investment officer of Bitwise.
In a market note dated March 5, Hougan pointed out, “Market participants have grown skeptical of the announcement because the suggested reserve includes more than just Bitcoin. The introduction of smaller-cap assets has made things unnecessarily complicated.”
Trump first announced on March 2 that the reserve would comprise assets like Solana (SOL), XRP (XRP), and Cardano (ADA), later stating that Bitcoin (BTC) and Ether (ETH) would form the “heart” of the reserve. Hougan commented:
“After the dust settles, I believe the final reserve will be predominantly Bitcoin, and it will exceed expectations in size.”
The announcement initially boosted Bitcoin’s price, which subsequently fell below $83,000, only to recover slightly above $90,000 in response to Trump’s decision to delay auto parts tariffs on Canada and Mexico.
Trump’s shift from a Bitcoin-exclusive reserve has raised concerns among some cryptocurrency commentators, who argue that Bitcoin is the only digital currency appropriate for such a reserve. Coinbase CEO Brian Armstrong has stated it is “a successor to gold.”
Hougan remarked, “The inclusion of speculative assets like Cardano seems to be more of a calculated move than a strategic one.” He also noted that “despite the flawed rollout,” he believes the market is misinterpreting the situation, adding:
“Ultimately, this is a bullish development.”
According to Hougan, much like tariffs, Trump’s preliminary proposals are rarely final, and insights from major industry figures at the upcoming White House crypto summit could lead to alterations in the reserve’s composition.
Commerce Secretary Howard Lutnick has hinted that Bitcoin may be granted special status in the reserve, while “other crypto tokens will likely be treated in a different manner — positively, but differently.”
Hougan suggested there is a slim, though less likely, chance that backlash against this concept could result in the reserve being abandoned or restricted to cryptocurrencies the government has already acquired.
If the US establishes a crypto reserve, it may prompt other nations to pursue their own share of Bitcoin, he noted.
Source: Bitwise
It’s improbable that the US will liquidate any cryptocurrency it acquires, even if a Democrat succeeds Trump. Hougan stated that any crypto would be retained for a long duration, similar to the country’s gold reserves.
Related: Bitcoin volatility surges amid US crypto reserve and tariff concerns
“Democratic leaders won’t want to alienate voters without deriving substantial benefits,” he remarked.
“There is a significant segment of the population that embraces crypto, while a relatively small number are opposed to it,” Hougan added. “This was evident in the last election, where the GOP’s engagement with crypto earned it numerous votes, whereas the Democratic antagonism garnered little support.”
Hougan concluded that the market’s initial optimism “seems justified […] and I believe the market will come to recognize this.”
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