White House plans for a U.S. strategic bitcoin reserve fired up optimism among the world's crypto enthusiasts. But until this past week, the currency itself barely flickered as recent trade war and tariff news whipsawed markets. Industry experts project a vast, eventual impact on the bitcoin price and the cryptocurrency industry. This week's action may underscore those expectations.
Bitcoin prices rebounded nearly 27% from an April 9 low, erasing more than half their decline from the 2025 peak above $105,000 in January. Analysts say the creation of a strategic reserve could quietly spark a race to amass bitcoin.
President Donald Trump signed an executive order on March 6 to establish a bitcoin strategic reserve and a separate digital asset stockpile compiled of other cryptocurrencies. Formed largely from assets seized by the Treasury and other federal departments, the reserves have been instructed to find "budget-neutral" ways in which to acquire or otherwise own assets, but not to sell them — to simply hold them, like a digital Fort Knox.
A federal digital currency reserve suggests a new tier of investors entering the crypto market. In the current market, Virginia-based Strategy owns more bitcoin than the five largest estimated holdings by national governments, including the U.S. — combined. Among private companies, Block.one holds the largest bitcoin stash.
Other major buyers include the bitcoin ETFs, which have been wildly successful since their regulatory approval and launch in January 2024. The largest among those, the iShares Bitcoin Trust, reports an even larger bitcoin cache than Strategy's.
On the day of the White House announcement, bitcoin prices and the associated stocks and ETFs saw only mild impact.
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Just after the news broke, bitcoin fell below $85,000, from around $90,600 before the executive order, CoinMarketCap data shows. Overall, bitcoin bobbed between $77,000 and $87,000 for much of April, before scrambling above $95,000 over the past week.
Shares of MicroStrategy, as Strategy is formally called, marked a bottom to a three-month pullback the week the strategic reserve was announced. The stock has rebounded nearly 44% since the end of February. IShares Bitcoin, which was also trending lower, perked up 3% the week of the news. The exchange traded fund then settled back and traded flat for weeks before rebounding sharply in April.
Bitcoin miners — such as Hive Digital Technologies and TeraWulf — saw only a negligible share-price impact. Most miners have fallen back to trade below 5.
Why Should U.S. Create A Bitcoin Strategic Reserve?
Those that were hoping for an immediate price boost, either to cryptocurrencies or crypto-focused stocks, weren't thinking about it correctly, according to Bobby Zagotta, president of the U.S. arm of crypto exchange Bitstamp.
"From my standpoint, the reason for having it is for the U.S. government — and the Treasury specifically — to diversify and expand their value base in a new way," he said.
"If that increases the price of bitcoin over time, great," Zagotta said. "But that shouldn't be misconstrued as the driver."
Few are likely to buy the pitch that the bitcoin industry is fundamentally concerned with the health of the U.S. debt portfolio. Ultimately, short term and long, it is all about the bitcoin price.
To that end, Zagotta acknowledges that a U.S. reserve would help encourage more institutions and investors to participate. That demand, in turn, would fuel higher prices.
Greg Benhaim, vice president of product at digital asset manager 3iQ, called it a "net benefit to bitcoin and the industry." He pointed out the way the order distinguished bitcoin from other cryptocurrencies, noting its reputation as a store of value.
"Most crypto investments are more akin to early-stage tech venture investments, whereas bitcoin is much more entrenched, almost like digital gold, or a store of value, coded monetary policy, and it's much more battle-tested," Benhaim said.
Government Holdings: Who Owns Bitcoin?
The U.S. is the first major country to commit to an official bitcoin reserve. In 2021, El Salvador — whose economy is about a third the size of Puerto Rico — named bitcoin an official currency. It required businesses to accept it. Its initial purchase of about $21 million in bitcoin did well, with the currency climbing 89% from its acceptance as legal tender through the end of 2024.
But implementation costs and other factors made the effort prohibitively costly. In a December deal for a $1.4 billion loan from the International Monetary Fund, El Salvador downgraded bitcoin from currency status and ended its required acceptance by businesses.
A number of smaller countries — including the United Arab Emirates, Switzerland, Singapore, Nigeria, Ethiopia, Kenya, Argentina and some EU member states — are ramping up adoption or regulatory efforts, but do not manage official government bitcoin reserves.
Binance CEO Richard Teng, in an April 17 interview with the Financial Times, revealed that "quite a number" of governments and sovereign wealth funds have approached the exchange looking to establish their own reserves. Teng declined to disclose the countries, but Binance has publicly partnered with Pakistan and Kyrgyzstan to develop regulatory crypto frameworks.
Multiple countries have sizable bitcoin holdings, but they are not official strategic reserves. The U.S. is the top government holder with around 198,000 bitcoin as of mid-April, according to Bitcoin Treasuries data. China ranks second with around 190,000 bitcoin, followed by the U.K. with 61,245 and Ukraine with over 46,000.
Bitcoin Buying Options
Although the Trump administration hasn't made any official proposals to buy bitcoin, Benhaim says there are budget-neutral ways to acquire the cryptocurrency. "Budget neutral" essentially means the purchases must be made without increasing taxpayer costs.
Two potential options are selling gold to buy bitcoin, or using tariff revenues.
Whatever route is taken, Benhaim expects the government to issue post-facto announcements. That would reduce the opportunity for speculators to jump in and drive prices higher.
Preannouncing the purchases would be "the equivalent of Warren Buffett saying I'm going to buy a bunch of Apple stock over the next year. Everyone will buy it and sell it to me," Benhaim said.
Separately, Sen. Cynthia Lummis (R-Wyo.) and Rep. Nick Begich (R-Alaska) on March 11 introduced the Bitcoin Act of 2025, which proposes acquiring 1 million bitcoin over five years to bulk up the strategic reserve. The bill, which has not yet passed the Senate, calls for budget-neutral purchase strategies.
Benhaim doubts it will pass due to the divided nature of Congress. If it does, the move would telegraph to the world the U.S. purchase timeline.
Refinancing U.S. Debt With BitBonds
A few crypto industry players have proposed ways to implement President Trump's executive order and utilize bitcoin to refinance national debt.
The Bitcoin Policy Institute in late March proposed that the U.S. adopt bitcoin-enhanced U.S. Treasury bonds. These "BitBonds" would be structured in a way that allocates 90% of the bond proceeds to conventional funding operations. Ten percent would go toward bitcoin acquisition.
Assuming a scale of $2 trillion in BitBonds, the Bitcoin Policy Institute estimates the proposal could generate $700 billion in annual interest savings over 10 years.
Matthew Sigel, head of digital asset research at VanEck, issued a similar BitBond proposal at the Strategic Bitcoin Reserve Summit on April 15.
VanEck also proposed a 90% government bond and 10% bitcoin structure with a 10-year term. Under the VanEck plan, investors would receive bitcoin gains up to a 4.5% annual yield. If the gains exceed 4.5%, the government and bond buyer would split the excess 50-50.
Flywheel Effect And The Bitcoin Price
El Salvador is the only country that is buying bitcoin in the open market, Sigel noted in an interview with IBD. El Salvador's bitcoin holdings currently represent just over 3% of its annual GDP.
But eight nations including El Salvador, Ethiopia and Kenya mine bitcoin using government resources, primarily energy production. While geographic markets limit the sale and price of produced electricity, they can use the energy to mine bitcoin, then trade the bitcoin for currency.
"So that model is very attractive for poor countries that are energy rich, who have a lot of debt," Sigel said.
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He noted a "handful" of proposals for governments like Japan, Germany and Sweden to buy bitcoin on the open market. These efforts have not gathered a bipartisan consensus and look unlikely in the near term.
But if other countries get involved and start announcing bitcoin purchases, it could spark a worldwide race for the industry.
"I think it's going to have a very strong impact," Benhaim said. "If the U.S. or China or Russia were to publicly announce that they've acquired X number of bitcoin and are going to continue doing so, and they view it as essential for their sovereign wealth, it's going to create a flywheel effect where everyone is going to rush to accumulate more." The flywheel effect is a concept popularized by author Jim Collins that describes how small wins for businesses over time spark exponential growth.
For bitcoin, the momentum likely will start slow but will "really accelerate" once larger countries jump in, Benhaim predicts.
States Move Toward Crypto Reserves
Despite the Trump executive order, Benhaim expects states to actually move more rapidly toward full-fledged bitcoin reserves and open-market purchases.
The Texas Senate in March passed a bill to establish a bitcoin and crypto reserve as well as an advisory committee. Arizona, New Hampshire and Florida as of early April had advanced crypto reserve bills. North Carolina is working on legislation that would allow the state treasurer to invest up to 5% of the state pension into crypto.
Utah in March passed a bill allowing citizens to mine bitcoin, but at the final reading it scrapped a provision establishing a bitcoin reserve. Oklahoma, Montana, North Dakota, South Dakota and Wyoming have recently shot down reserve initiatives.
By late April, more than 20 states had introduced or were considering legislation related to bitcoin reserves or digital asset investments, according to reports.
Sigel believes it makes more sense for states to have reserves because they don't print money and can't manufacture their own fiat currencies.
"And these state gambits in the aggregate could account for billions of dollars of bitcoin buying," he added.
How U.S. Strategic Reserve Will Affect Bitcoin Supply
Still, combined national government holdings total less than 2.5% of the entire 21-million-unit supply of bitcoin. Public companies hold about 3.35% of the total supply, while private firms hold 1.37%, according to Bitcoin Treasuries data.
ETFs and other funds hold about 6.17% of the supply.
At least for the time being, any U.S. federal bitcoin reserve would constitute a very small percentage of the overall supply. Unlike the Strategic Petroleum Reserve, which is often managed to prop up or depress oil prices, a bitcoin reserve wouldn't be large enough to establish a price floor, Sigel said.
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But it could help temper the risk of selling the coins in a "disorderly fashion that would tank the price," he added. "But until we see a pathway towards accumulation, I'm guessing that bitcoin will remain quite volatile."
Benhaim sees a net benefit to the government holding its bitcoin, because it would add a "tremendous" amount of liquidity to the market. That should incentivize major traditional firms to join the space, develop more robust marketplaces and create more transparency around the industry.
"Effectively, as the asset class grows in size, it incentivizes more very smart people to start participating in the asset class, which is going to lead to a lot of growth and development," he said.
Current Bitcoin Mining Activity
Sigel notes that at current mining rates, miners mint about 164,000 bitcoin per year. That's about $15.5 billion in new currency annually at current price levels.
"ETFs have more than absorbed that amount since they have launched, even without government buying," he said. He adds that over 100 companies now hold bitcoin on their balance sheet, double from last year.
"So I personally don't think it's necessary to have governments buying in the open market," he said. "But with only $13 billion a year of issuance, any amount is additive."
Bitcoin Price Forecast
Bitcoin surged above $87,000 on April 21, as the price of gold rallied to a record high above $3,400 per ounce and the dollar index plunged to a three-year low. As of Friday, bitcoin was up about 3% for 2025. Still, the cryptocurrency is up more than 37% from Nov. 4, after the U.S. presidential election.
The five largest bitcoin ETFs, measured by their currency holdings, are iShares Bitcoin, Fidelity Wise Origin, Grayscale Bitcoin, ARK 21Shares Bitcoin and Grayscale Bitcoin Mini. All are nearly flat for the year.
Zagotta of Bitstamp is optimistic for the second half of the year. He expects additional U.S. regulatory clarity, even if it isn't "complete."
"It may be a stablecoin law, or a roadmap to a regulatory framework that's being pursued, and that would really help," he said.
Benhaim notes that forecasting a specific price target for bitcoin is hard in the current environment. He's focused on the long-term outlook rather than short-term moves. But if the developing cryptocurrency network continues to perform and adoption grows, he says, the price should trend higher.
Sigel points out that many risk assets — stocks, commodities, high-yield bonds — have been volatile and highly correlated, given current macro uncertainty. Bitcoin has been included in that.
"Simply relieving that (uncertainty) would be enough for bitcoin to kind of resume its outperformance," he said. Despite its reputation for being volatile, he added, bitcoin has tended to outperform the Nasdaq "over any time period that you measure."
Investors can certainly find specific periods when the Nasdaq outpaced bitcoin: the year of 2022, for example. But in four of the past five years, bitcoin has outrun the Nasdaq — generally by an order of magnitude.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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