The sell-off is due to market concerns that the structure of the reserve is more politically motivated than strategic.

Written by: cryptoslate

Translated by: Blockchain Knight

Bitwise Chief Investment Officer Matt Hougan believes that the market has misunderstood the impact of President Donald Trump's proposed strategic Crypto asset reserve plan. He argues that while there may be volatility in the initial stages, the plan will ultimately have a positive effect on digital assets.

Hougan predicts that the final reserve will primarily consist of BTC and that its scale is likely to far exceed industry expectations.

He also suggested that other countries may accelerate their acquisition of BTC, and once the U.S. completes its acquisition, it is very likely that it will not sell its holdings for a long time (or even forever).

Industry Concerns

On March 2, Trump announced the establishment of a reserve that includes digital assets beyond BTC, which initially caused the BTC price to soar from $85,000 to $95,000. However, due to doubts about the inclusion of other Crypto assets and escalating geopolitical tensions, the BTC price experienced a pullback on March 3.

According to Hougan's analysis, the sell-off was due to market concerns that the structure of the reserve is more politically motivated than strategic, leading to negative sentiment spreading in the market.

Some industry leaders, including Coinbase CEO Brian Armstrong and Castle Island Ventures co-founder Nic Carter, criticized the inclusion of speculative assets like Cardano (ADA).

Bitwise CEO Hunter Horsley also advocated for reserving only BTC, which aligns with the broader market view that such a move would provide greater stability.

However, Hougan believes the market has overreacted. He stated that the initial proposal has shifted the discussion, making the storage of only BTC a more viable outcome.

Hougan said, "The boldness of the initial proposal has broadened the Overton window (the range of political acceptability)."

He also believes that the announcement is just the first version of the proposal, and as the industry provides more feedback to the Trump administration, the proposal is likely to evolve further.

Hougan further stated that regardless of how the final version of the proposal changes, the core idea of a government-supported reserve remains a long-term positive factor for the industry.

Global Ripple Effects

Hougan also emphasized that this initiative could have broader geopolitical implications outside the U.S., suggesting that other countries may now feel pressured to establish their own BTC reserves, thereby accelerating global adoption.

Hougan pointed out, "El Salvador, Bhutan, and Abu Dhabi have already made strategic BTC acquisitions. If you are Honduras, Mexico, or Guatemala, can you afford to be left out when you see El Salvador and the U.S. taking action? If you are Dubai, Qatar, or Saudi Arabia, will Abu Dhabi's lead prompt you to take action?"

White House Crypto asset advisor David Sacks will host a Crypto asset summit on March 7, where industry leaders are expected to push for revisions to the reserve structure. Sacks recently revealed that Trump will announce more details about the reserve at the summit.

Long-term Policy Implications

Hougan also commented on the possibility of the government overturning this policy in the future, stating that from a political reality perspective, this is unlikely to happen.

He noted that Crypto assets have gained strong support among certain voter groups, making it difficult for Democrats to completely oppose the issue.

Hougan said, "The Republican acceptance of Crypto assets won votes in the last election, while the Democrats' hostility received little support. Any purchased Crypto assets could be held long-term, much like the U.S. gold reserves."

Although the market's initial reaction has been mixed, Hougan believes that the establishment of a strategic Crypto asset reserve in the U.S. marks a turning point.

Whether the final reserve includes a variety of assets or only BTC, the broader conclusion is that the U.S. government now views Crypto assets as a strategic asset, a stance that could have profound and lasting effects on global markets.

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