Key Takeaways
- Trump's proposed crypto reserve is expected to be mostly Bitcoin.
- Bitwise's Matt Hougan believes the reserve will be larger than expected.
- Commerce Secretary hints Bitcoin may receive special status.
Despite initial concerns over the inclusion of smaller altcoins, Hougan believes the market is overreacting.
He stated in a March 5 market note:
Market participants have soured on the announcement because the proposed reserve holds more than Bitcoin.
The inclusion of small-cap assets in the announcement unnecessarily complicated matters.
Initial announcement
Trump initially announced on March 2 that the reserve would include Solana, XRP, and Cardano, later clarifying that Bitcoin and Ether would be “the heart” of the holdings.
However, Hougan expects that once finalized:
The final reserve will be nearly entirely Bitcoin, and it will be larger than people think.
Bitcoin price fluctuations
Bitcoin’s price initially surged on the news before dropping below $83,000, recovering to over $90,000 in part due to Trump’s decision to delay auto parts tariffs on Canada and Mexico.
Industry concerns
Some industry leaders, including Coinbase CEO Brian Armstrong, have expressed concern about including altcoins, arguing that Bitcoin is the only asset suited for such a reserve.
Hougan echoed this sentiment, stating:
The inclusion of speculative assets like Cardano feels more calculating than strategic.
Special status for Bitcoin
Commerce Secretary Howard Lutnick has suggested that Bitcoin may receive special status in the reserve.
Hougan also noted that political shifts are unlikely to result in a sell-off of any Bitcoin the U.S. acquires, comparing it to gold reserves.
