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Earlier this month, President Trump reinvigorated crypto markets with his announcement of five cryptocurrencies for U.S. strategic reserves: Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Solana (SOL), and Cardano (ADA). In making this announcement, Trump has opened the door to a new financial era and created an opportunity for Bitcoin and other cryptocurrencies to go toe-to-toe with the leader in global reserve fiat currency, the US dollar.
How did Bitcoin get here? The Bitcoin revolution started and grew as a reactionary movement to another global financial event, the 2008 financial crisis that was driven by an unsustainable housing bubble propped up by poor lending practices and toxic assets. The interventions made by central banks to correct the problem—including the bailout of institutions “too big to fail”—demonstrated to Bitcoin whitepaper writer and “inventor” Satoshi Nakamoto what they had already long believed about the fundamental problems of centralized economics and the need for a decentralized “e-cash.” The Bitcoin blockchain itself went live when Satoshi embedded the following message in the genesis block:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
The current era might be even more auspicious for driving the second wave of the Bitcoin revolution, especially if you believe Bitcoin is strong enough to become something like digital gold or a global reserve currency. The problem presented by the current era is not that of the bailout but the fundamental problem of fiat currency itself, that sticky problem of inflation.
Prone to centralized currency manipulation and with countries still drowning in the fiat pumped out during and after the COVID-19 crisis, inflation has proven to be a fundamental complication that has bedeviled leaders across the globe and the political spectrum. Even with a number of political incumbents in different countries falling in defeat to the problem, inflation is proving to be especially resilient, even for the many disruptors who came in on the anti-inflation, anti-incumbent sentiment.
In some cases, it is a problem isolated to a few products and sectors facing unique and probably temporary supply challenges, such as in the case of the price of eggs. However, if the problem persists, a crypto reserve, and especially a Bitcoin reserve, could present an elegant solution to at least partly halting inflation. This will be a good thing not only for those governments, but for the evolution of the one truly free and fair digital currency, the one that has been with us since 2009.
Can a US Bitcoin reserve actually work?
Is this even workable, especially here in the United States?
Generally, a Bitcoin-led reserve would present a hedge against inflation, with the drawback being that governments would lose some flexibility around these holdings in the customary fiat-driven toolkits that have helped those governments heat up or cool down economies as needed.
It makes sense that governments would look at Bitcoin as some portion of a reserve, particularly as a small, high-risk, high-reward portion of reserves, even as those governments missed out on the initial march to $100,000. There could be other rewards as well. As Senator Cynthia Lummis has pointed out to Elon Musk, now a top advisor to President Donald Trump, a crypto reserve could also be an automatic solution for governments to better audit those reserves, digitally.
State governments in the US have actually been leading the way on this issue, providing a sort of roadmap for the federal government to use. Nearly half of all state governments have either put money into crypto reserves or are beginning that process. If Bitcoin continues to grow through this increased demand on its fixed supply, that makes it an even more attractive option to the U.S. federal government and other governments like it.
If Bitcoin is to truly become part of the US national reserves, there must be clear regulatory frameworks, robust custody solutions, and bipartisan political will. From a monetary policy standpoint, the Federal Reserve would face an asset it cannot directly manipulate, potentially altering how we manage interest rates and national debt.
Getting in while the getting’s good
But what would all these governments diving in do for Bitcoin itself? We’ve already seen the temporary price bump on just the news itself, but the actual ramifications if it’s implemented will be more far-reaching.
For one, Bitcoin would immediately be tied to fundamental avenues of public investment, especially retirement and pension funds. That is real attention and institutional interest that goes beyond online message boards, Telegram, and the Robinhood app.
The US federal government following the states’ lead would, in turn, create a ripple effect where large companies in the private sector would follow the public sector’s lead. If Bitcoin were in national reserves, it would legitimize Bitcoin as an institutional-grade asset, prompting companies to hold it more confidently on their balance sheets. In practice, we’d see new liquidity strategies—like crypto-backed lending—become mainstream, and corporations would more actively integrate Bitcoin into their long-term capital planning.
If Bitcoin were deemed a national reserve, its credibility as collateral would also skyrocket. Bitcoin-backed loans would become as standard as borrowing against gold, adding a modern dimension to liquidity in times of crisis. Its digital nature offers global 24/7 markets, which can provide flexibility and speed that gold or treasuries can’t match, although volatility remains a consideration.
A national BTC reserve would cement Bitcoin’s status as “digital gold.” We’d see broader acceptance by banks and alternative lenders offering BTC-collateralized loans, lines of credit, and treasury management solutions. New financial tools—like Bitcoin-based municipal bonds or sovereign BTC ETFs—could also become viable.
There would still be risks, including price volatility, but that can be a benefit, not a bug, especially if it were incorporated as just one segment of a diversified portfolio with different risk thresholds. Policymakers must balance both perceived and real concerns with the massive upside of holding a finite digital reserve asset.
On the flip side, Bitcoin provides an uncorrelated hedge against inflation and can attract global capital if the US is seen as Bitcoin-friendly, truly positioning it as the best reserve asset in the world. It behooves the federal government to follow President Trump’s lead and begin to seriously explore this option while Bitcoin is still at a relatively low and investment-friendly price.
