Trump's Unexpected Announcement of a Strategic Crypto Reserve Sends Bitcoin's Price Soaring

The crypto markets have whipsawed following President Donald Trump's unexpected announcement of a strategic crypto reserve over the weekend.

Crypto markets have whipsawed following President Donald Trump’s unexpected announcement of a strategic cryptocurrency reserve over the weekend, while a Bitwise Asset Management chief investment officer (CIO) says traders are overreacting to details and missing what could be a bullish development for digital assets.

On Sunday evening, President Trump unveiled a U.S. government initiative to acquire and hold five different cryptocurrencies—Bitcoin, Ethereum, Solana, XRP, and Cardano—in a strategic reserve. The market response was initially strong, with Bitcoin’s price surging from around $85,000 to $95,000. However, as Matt Hougan notes in his latest investor memo, that optimism was short-lived. By Monday, the major crypto assets named in the announcement had surrendered their gains.

Everyone Is Misjudging Trump’s Crypto Reserve

Bitwise released its memo on March 4, titled “The Market Has This Wrong: Thoughts on Trump’s Strategic Crypto Reserve.” In it, Hougan attributes the abrupt retracement to overly narrow market interpretations of the proposed plan.

“The market is overthinking things. For all the flaws in the rollout, the reserve news is bullish,” Hougan says. He adds that the proposal’s inclusion of a broad range of crypto assets is being met with skepticism.

“A large part of the criticism is focused on the White House’s choice of five cryptocurrencies, which critics say is too broad an inclusion. As [Bitwise's Hunter Horsley] noted in his post, there is a strong argument to be made for a more conservative, bitcoin-only reserve.”

However, Hougan argues that market participants may be failing to see the bigger picture.

In the memo, Hougan highlights three major takeaways regarding the strategic reserve plan.

First, he suggests that President Trump’s first public draft often differs considerably from what eventually becomes policy. The reserve, he argues, might ultimately shift to a “bitcoin-only” approach or evolve to a more balanced composition following industry input.

“Over the coming days, big names from the crypto industry will make their feelings felt about the reserve idea. We learned this in the last election, where the GOP’s courtship of crypto gained it many votes while Democratic hostility gained few. I suspect that any crypto that is purchased will be held for a very long time.”

Despite this optimism, Hougan acknowledges the prospect that the pushback could become so intense that the reserve is either scaled down or scrapped. Critics say that including less-established assets alongside Bitcoin only muddies the waters and may undermine the legitimacy of the initiative.

However, Hougan believes that “the final reserve will be nearly entirely bitcoin, and it will be larger than people think.”

He also emphasizes a broader point: the simple acknowledgment by the U.S. government that crypto assets can be deemed “strategic” has potentially game-changing significance.

In his view, such a designation could catalyze global adoption, spurring other countries to purchase crypto or ramp up holdings already in place.

“If you are Honduras, Mexico, or Guatemala, and you’re watching El Salvador and now the U.S. acquire bitcoin, can you really afford to be at zero?”

According to Hougan, Sunday’s announcement should be interpreted as bullish for digital assets—despite the complicated rollout and the resulting price swings. He warns that markets might be letting short-term controversies overshadow the bigger picture.

“The U.S. government declaring crypto assets ‘strategic’ is bullish. I think the market will eventually realize that.”

As the White House prepares for a scheduled Crypto Summit this Friday—hosted by crypto czar David Sacks—industry voices will likely press for a more measured and possibly narrower reserve structure.

Whether the final policy ultimately narrows to a bitcoin-focused plan or persists with multiple coins, Hougan believes it may still mark a meaningful step forward in the mainstream legitimization of crypto. The initial reaction may have been mixed, but, as he succinctly puts it, “after the dust settles, I suspect the final reserve will look pretty good.”

At press time, BTC traded at $87,565.