Bitwise CIO Matt Hougan believes the market is underestimating the impact of Trump’s crypto reserve, predicting it will be mostly Bitcoin and larger than initially thought.
Trump’s Crypto Reserve Will Be Predominantly Bitcoin
Despite initially including multiple altcoins, Trump’s proposed crypto reserve will likely be almost entirely Bitcoin, according to Bitwise chief investment officer Matt Hougan. In a March 5 market note, Hougan stated that the market is misinterpreting the announcement.
“Market participants have soured on the announcement because the proposed reserve holds more than Bitcoin,” Hougan said. “The inclusion of small-cap assets in the announcement unnecessarily complicated matters.”
Trump first mentioned the reserve on March 2, listing Solana, XRP, and Cardano before later adding Bitcoin and Ethereum. However, Hougan believes that once the plan is finalized, Bitcoin will dominate the holdings.
Market Reaction and Concerns
Bitcoin’s price initially surged after the announcement but later dropped below $83,000, only recovering above $90,000 following Trump’s decision to delay auto parts tariffs on Canada and Mexico.
Some crypto leaders, including Coinbase CEO Brian Armstrong, have criticized the inclusion of altcoins, arguing that Bitcoin is the only asset suitable for a national reserve, comparing it to gold.
Hougan also questioned the selection of certain altcoins, saying, “The inclusion of speculative assets like Cardano feels more calculating than strategic.” However, he maintains that the market is misreading the situation and remains bullish on the long-term impact.
White House Crypto Summit Could Shape Final Reserve
Trump’s initial proposals are rarely final, according to Hougan, and upcoming discussions with industry leaders at the White House crypto summit could refine the reserve’s composition.
Commerce Secretary Howard Lutnick has hinted that Bitcoin could receive special treatment, while other cryptocurrencies may be “treated differently—positively, but differently.”
The Long-Term Impact of a US Crypto Reserve
If the US moves forward with a national crypto reserve, other countries may follow suit, Hougan suggested. He also believes that any crypto acquired by the US government will be held long-term, much like its gold reserves.
Even if a Democrat takes office after Trump, selling off the reserve is unlikely, as “Democratic leaders won’t want to alienate voters at little benefit to themselves.”
Hougan pointed out that crypto-friendly policies helped Republicans gain votes in the last election, while anti-crypto stances didn’t significantly benefit Democrats. He remains confident that the market will eventually recognize the bullish nature of Trump’s crypto plans.
