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Junior Content Creator
Harvey Hunter
Junior Content Creator
Harvey Hunter
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Despite the controversy surrounding Trump’s proposed US crypto reserve allocation, Bitwise CIO Matt Hougan believes the “market has this wrong.”
While Bitcoin, Ethereum, Solana, XRP, and Cardano surged after being named as reserve assets, the rally quickly faded into a “sell the news” event, triggering a sharp correction.
As of today, Bitcoin and other leading altcoins have given back most, if not all, of their gains.
Addressing the pump-and-slump reaction in a note to clients, Hougan argued that market participants soured on the announcement by “overthinking” the token allocation.
Why the Market is Concerned by Trump’s Crypto Reserve Plans
Hougan credited the sub-par market reaction to fact that “speculative assets like Cardano feel more calculating than strategic.”
Some commentators don’t like the idea of potentially using taxpayer funds to backstop the price of crypto, a speculative digital asset with limited underlying value.
Speaking to this point on X, Euler Lab CEO Michael Bentley argued that there is a “strong chance this is abandoned when it becomes apparent US taxpayers are just exit liquidity for ADA bag holders.”
He added that “Bitcoin will be tarnished with the same brush, making it a net negative policy in the long run.”
Others approached the crypto reserve plans with cautious praise. On x Coinbase CEO Brian Armstrong wrote he was “excited to learn more,” but noted, “just Bitcoin would probably be the best option.”
“Despite the flawed rollout, I think the market is misreading things. In the end, this is bullish,” Hougan said, outlining three factors he believes the market is still missing.
3 Bullish Reasons the ‘Market Has This Wrong’
Hugan first noted that the this is not the final proposal, reflecting on Trump’s negotiation style—whether that be in regard to geopolitical conflict, tariffs or a US crypto reserve.
He hypothesised that the boldness of the initial proposal may be a negotiation tactic by President Trump.
Until Sunday, the very idea of a strategic crypto reserve seemed unlikely. Now, a bitcoin-only reserve sounds almost conservative.
However, he did air caution that the pushback could be large enough to that the entire concept of the reserve gets scrapped, or limited only to assets already held via seizure.
Secondly, he credited global adoption of Bitcoin a reserve asset as the real reason a US reserve is so bullish, citing its potential to “spark a global race.”
The second factor Hougan highlighted speculation mounting that an American reserve would spark a global accumulation race as countries position themselves for “the emergence of bitcoin as a globally important monetary asset.”
This week’s announcement—as imperfect as it is—marks the first time the U.S. has ever said that bitcoin is a strategic asset. As long as that stays intact, it feels like a game-changer to me.
Finally, Hougan dismissed suggestions that even if the Republican President manages to create a reserve, if Democrats take back office they could sell the reserve.
He argued that once bought, the crypto reserve assets would likely outlive Trump’s term and not be sold, regardless of the coming administration’s political alignment.
We learned this in the last election, where the GOP’s courtship of crypto gained it many votes while Democratic hostility gained few.
