A Strategic Bitcoin Reserve: Game Changer
According to cryptocurrency researcher CoinShares, the potential creation of a strategic Bitcoin reserve in the United States would serve as a much greater catalyst for Bitcoin adoption and mainstream legitimacy than any other factor. CoinShares said in a blog post this January that the long-term effects of such a reserve would be much more significant than the approval of ETFs in 2024.
The Bitcoin Act Proposal
The Bitcoin Act, proposed by Senator Cynthia Loomis in July 2024, mandates the US Treasury Department to buy 1 million BTC over five years. This ambitious plan has been gaining momentum since the November elections in which Republicans, led by President-elect Donald Trump, won a Senate majority. Trump has expressed support for the Act, but it is not yet law.
Lowering Barriers for Institutions
This is commonly because institutional investors have many question marks over the credibility of Bitcoin as an asset class. CoinShares explained that the Bitcoin Act would alleviate many of these challenges as Bitcoin would have the endorsement of the world’s largest economy. This could reduce stigma and lead to much wider participation from institutional investors, opening up a new wave of adoption.
Institutional Inflows Surge
The approval of nearly a dozen spot Bitcoin ETFs in early 2024 marked a significant milestone for cryptocurrency markets. These together amassed more than $100 billion in net assets by November, a signal of strong demand from traditional investors. Analysts at Steno Research see another $48 billion in net inflows into Bitcoin ETFs in 2025.
A strategic Bitcoin reserve would amplify this momentum into “demand shocks” that could further drive Bitcoin’s price upwards. Asset manager Sygnum Bank projects such demand could push Bitcoin’s price beyond $1 million per coin in coming years.
Political and State-Level Backing
Growing support for the Act is not limited to federal lawmakers; several US states, including New Hampshire and North Dakota, are considering their own state-level bills with the aim of creating local Bitcoin reserves. In fact, such initiatives from across the political and geographic divides reflect immense belief in the transformational impact of Bitcoin.
Global Ripple Effects
If the Bitcoin Act is passed, it would set a global precedent that could prompt other countries to build their own Bitcoin reserves. According to experts such as Adam Back, CEO of Blockstream, such a transition could trigger substantial inflows into Bitcoin, making it a store of value and driving its price into seven-figure territory.
A US Bitcoin reserve would change everything in terms of adoption, institutional credibility, and Bitcoin’s role in the global economy.
