Trump's Crypto Reserve Likely to Be Dominated by Bitcoin, Says Bitwise

Matt Hougan, Chief Investment Officer at Bitwise, has weighed in on U.S. President Donald Trump’s announcement regarding the creation of a national crypto reserve, asserting that the reserve will likely be dominated by Bitcoin (BTC) rather than a basket of altcoins. Despite initial confusion and concern in the crypto market due to the inclusion of several large-market cap altcoins, Hougan believes the final composition of the reserve will be far more Bitcoin-centric than initially suggested.

Bitcoin to Dominate Trump’s Crypto Reserve

On March 2, 2025, Trump revealed plans for a U.S. crypto reserve that would include several major cryptocurrencies, notably Bitcoin, Ethereum (ETH), Solana (SOL), XRP, and Cardano (ADA). While Trump emphasized that Bitcoin and Ether would serve as the "heart" of the reserve, the inclusion of smaller, speculative altcoins like Solana and Cardano sparked confusion and concern among market participants.

In a market note published on March 5, Hougan explained that the initial reaction to Trump’s announcement was overly negative, with market participants misinterpreting the inclusion of altcoins as a complication. "Market participants have soured on the announcement because the proposed reserve holds more than Bitcoin," Hougan said, noting that the introduction of small-cap assets in the plan unnecessarily muddied the waters.

Despite these concerns, Hougan remains optimistic. "After the dust settles, I suspect the final reserve will be nearly entirely Bitcoin, and it will be larger than people think," he added. This sentiment suggests that the inclusion of altcoins in the initial announcement is more about political calculation than strategic planning for the reserve.

Bitcoin Price Reactions and Market Volatility

Bitcoin’s price initially surged following the news of its inclusion in the reserve, but it later dropped below $83,000 amid broader market volatility. By the following day, Bitcoin had recovered to above $90,000, partially due to Trump's decision to delay auto parts tariffs on Canada and Mexico, which alleviated some of the uncertainty in high-risk assets, including Bitcoin.

Hougan believes that the market’s initial pessimism surrounding the announcement is misplaced. "In the end, this is bullish," he said, referring to the long-term potential of the reserve and its likely positive impact on Bitcoin’s status as a reserve asset.

A More Strategic Reserve Plan

Despite the complicated rollout, Hougan suggests that Trump’s initial proposals should not be taken as final. He pointed to the upcoming White House crypto summit, where input from major industry figures could lead to adjustments in the reserve's structure.

Commerce Secretary Howard Lutnick has already hinted that Bitcoin could receive special status in the reserve, while other cryptocurrencies might be treated differently, though still favorably. This indicates a potential shift toward making Bitcoin the primary asset in the reserve, with other tokens receiving a more secondary role.

Although the idea of a national crypto reserve has drawn mixed reactions, Hougan believes there’s a small but unlikely chance that pushback could result in the entire plan being scrapped or limited to assets already seized by the government. However, he added that the creation of a U.S. crypto reserve could spark similar initiatives in other countries, further cementing Bitcoin’s status as a global store of value.

The Long-Term Impact of a U.S. Crypto Reserve

Looking ahead, Hougan is confident that any crypto assets purchased by the U.S. government would likely be held for the long term, similar to the country’s gold reserves. This would make it unlikely that a future Democratic administration would liquidate the holdings, as doing so could alienate voters who are increasingly supportive of cryptocurrencies.

"Democratic leaders won’t want to alienate voters at little benefit to themselves," Hougan explained, noting that a significant number of people now favor crypto, a sentiment that was apparent in the last election cycle, where the Republican Party’s outreach to crypto enthusiasts helped secure votes. Conversely, hostility toward crypto from some Democratic leaders has garnered little support.

Final Thoughts

Hougan concludes that the initial bullish response to Trump’s announcement was the correct one and that the market will eventually recognize the long-term positive implications of a national crypto reserve that is heavily weighted in Bitcoin. As the situation continues to develop, all eyes will remain on the U.S. government’s next steps, which could have significant implications for Bitcoin’s role in the global economy.

In Hougan's view, the proposed reserve is a net positive for Bitcoin and the broader crypto market, with the potential to solidify Bitcoin’s place as a global financial asset for years to come.