Bitcoins Future Comes Down To This One Question, Says Bitwise
The US President Donald Trump has formally established a strategic Bitcoin reserve last weekan action that has ignited both celebration and concern across the industry. At the heart of this debate is one central question: Will Bitcoin become a geopolitically important global macro asset like gold, or will it remain a niche holding among libertarians, cypherpunks, and speculators?
That is the core takeaway from Bitwises latest investor memo, authored by Chief Investment Officer Matt Hougan. Titled The Only Question That Matters in Bitcoin and dated March 10, 2025, the memo underscores how the long-term prospects of Bitcoin may hinge on whether governments worldwidestarting with the United Statesview it as indispensable enough to keep building strategic reserves.
The One Big Question For Bitcoin
In the memo, Hougan highlights the striking nature of the US governments decision, writing: Fifteen years after Bitcoin was createda decade and a half of ridicule and skepticism, of people calling it a pet rock and rat poison squaredthe US government declared Bitcoin a strategic asset that shall not be sold.
He argues that Bitcoins endorsement as a strategic reserve asset signals a historic shift: It is a historic milestone, which in time will help propel Bitcoin to new all-time highs. Congratulations to all who believed in this possibility before it was cool.
Yet, markets have not uniformly welcomed this announcement. While the governments formal recognition would seem to bolster Bitcoins legitimacy, it also disappointed some investors who had expected an immediate influx of new government purchases.
Shortly after the reserve news emerged, Bitcoins price plummeted 13% from its recent high of over $92,000, dropping below $80,000 for the first time since November 2024. Hougan points to several contributing factors: broader economic worries, an equity market pullback, and, crucially, what he calls a misunderstanding of the governments actual stance.
Despite the historic nature of the declaration, Bitcoin is down sharply in recent days, he notes in the memo. Investors had apparently hoped for immediate large-scale purchases from the US Treasury. Instead, they learned that the reserve would initially comprise the governments existing Bitcoin holdingsan estimated 200,000 BTC, worth approximately $16 billion at current prices.
Hougan believes the markets negative reaction is unwarranted, emphasizing that merely retaining those 200,000 Bitcoin instead of selling themonce anticipated under the prior administrationremoves a substantial overhang from the market.
Moreover, the new executive order explicitly states: [T]he Secretary of the Treasury and the Secretary of Commerce shall develop strategies for acquiring additional Government BTC provided that such strategies are budget neutral and do not impose incremental costs on United States taxpayers.
In his memo, Hougan underscores the significance of the word shall, suggesting it indicates a mandate rather than a mere possibility. Above all, Bitwises memo insists on a long-term perspective, urging investors to concentrate on what Hougan terms the only question that matters in Bitcoin. That question is whether Bitcoin becomes globally important, akin to gold, or whether it remains peripheral.
If Bitcoin does matter globally, heres my view: It will be a $10-50 trillion asset, implying a 5x-25x return from current prices. If it doesnt, itll be a footnote in history, bouncing around below $150,000, supported only by a small cohort of libertarians, cypherpunks, and speculators. There is no in between. Bitcoin either matters globally or it doesnt, Hougan writes.
From this vantage point, the US governments choice to retain (and potentially expand) its Bitcoin holdings represents an enormous signal to other countries. If, as Hougan suggests, nations including Czechia, Russia, China, El Salvador, and India are weighing their own strategic moves in the digital asset space, the US adopting Bitcoin as strategic could spur them to follow suitespecially if they want to front-run any further American acquisitions.
While some investors may be disheartened by the immediate lack of massive government buys, Bitwises memo remains optimistic in the face of Bitcoins recent volatility. Hougan labels the current price dip as an opportunity for those eyeing a longer timeline. I see one big takeaway. This short-term weakness is a gift, he concludes.
At press time, BTC traded at $80,319.
Read more: https://www.newsbtc.com/news/bitcoin/bitcoin-future-comes-down-to-this-one-question/
Text source: NewsBTC
