A U.S. Crypto Reserve Will Add a Key Catalyst to the 2025 Rally
Many questions remain, but it's clear a reserve would help drive crypto prices higher
A recent update from President Donald Trump on a potential U.S. strategic cryptocurrency reserve set off waves of speculation over how such a reserve would be implemented, questions over whether the idea even makes sense, and backlash from Bitcoin enthusiasts over the inclusion of four additional digital assets.
What is beyond dispute is that this development is a major boost for crypto. In particular, Bitcoin stands to benefit since it will almost certainly make up the lion’s share of the reserve.
President Trump’s announcement was made in a March 2 post on his Truth Social account:
The omission of Bitcoin and Ethereum caused a brief panic in the crypto world, but the president shortly after followed up with a post noting that “And, obviously, BTC and ETH, as other valuable Cryptocurrencies, will be the heart of the Reserve.”
All five of the mentioned assets immediately jumped in value. Bitcoin jumped more than 11%, Ethereum more than 15%, Solana 23%, XRP 32%. Cardano (ADA) was by far the biggest winner, rocketing 70% higher.
The rally proved short-lived, however, as four of the five cryptos President Trump cited gave back all or most of the gains within 24 hours. Only Cardano retained any of its gains, up about 32% from its price before the announcement.
While President Trump talked about creating some sort of crypto strategic reserve several times during his campaign, the focus was on Bitcoin. The inclusion of XRP, Solana, and Cardano took much of the crypto community by surprise – and most weren’t happy about it.
Which Assets Belong in a Crypto Strategic Reserve?
Many in the crypto world see Bitcoin as a unique digital asset, akin to “digital gold” – a quality no other cryptocurrency can claim. That’s why they criticized the inclusion of other cryptocurrencies in the strategi reserve, even Ethereum.
“The US has strategic reserves of assets like gold, oil, cheese, and other assets that are important to the strength of our balance sheet or have national importance,” Anthony Pompliano, founder and CEO of Professional Capital Management and long-time crypto proponent, wrote in his Substack. “Crypto tokens like ETH, SOL, XRP, and ADA don’t fit that framework. These tokens are more akin to technology stocks, rather than hard money or natural commodities.”
Tyler Winklevoss, who along with twin brother Cameron operates the Gemini crypto exchange, posted similar thoughts on X:
Others complained on X that adding non-Bitcoin cryptos to the reserve was akin to spending taxpayer money to create “exit liquidity” for holders of those cryptocurrencies.
The inclusion of other cryptocurrencies also raises the question of how the reserve will be allocated. How much will be Bitcoin? What percentage of Ethereum or Cardano or Solana would make sense?
How all that gets resolved will play a big part in determining how much of an impact the reserve will have on the prices of each of those cryptocurrencies.
And don’t be surprised if one or more of those non-Bitcoin assets doesn’t make it into the reserve. One theory some have put forward suggest President Trump added the other cryptos to the mix primarily to use as a bargaining chip in negotiations with Congress.
“Whenever Trump needs to convince others stakeholders, he always starts with an absurd proposition that he can walk back from later: 'Trump Gaza,' Canada annexation, and now 'Strategic Cardano Reserve,’” Taproot Wizards co-founder Udi Wertheimer explained to The Block. “So in Trump chess language this just means he's telling Congress if you don't give me a Bitcoin reserve, I'm gonna ram Ripple [XRP] down your throats.”
There’s no telling whether this is President Trump’s plan or not, but it is a possibility.
On the other hand, it’s just as likely that President Trump has truly embraced a multi-coin strategic reserve. In his Substack, Pompliano, who talked with crypto leaders who met with the president, said they urged the inclusion of cryptos like XRP, Cardano, and Solana on the premise that they are “made in America.”
That idea would certainly resonate with a man who ran on an “America First” agenda.
How Would a Strategic Crypto Reserve Work?
President Trump hasn’t gotten into many details. It’s unclear how a strategic crypto reserve would be structured, or how the cryptocurrencies will be acquired. Analysts from brokerage for Bernstein told The Block that the reserve could reallocate gold reserves, issue Treasury debt, or reallocate funds from the Fed’s balance sheet.
It’s not even clear that President Trump can create the reserve on his own with an executive order; it might require an act of Congress. That’s not a deal-breaker, though. Republicans control both houses and could get additional votes from pro-crypto Democrats.
Just this week House Majority Whip Tom Emmer, R-MN, and Ritchie Torres, D-NY, announced the creation of a bipartisan congressional crypto caucus. This pro-crypto group of lawmakers could play a critical role in winning Congressional approval of a crypto strategic reserve.
It’s also worth noting here that the regulatory stance on crypto has shifted dramatically from outright hostility under the Biden administration to an open embrace under President Trump.
Since President Trump was sworn in, Securities and Exchange Commission (SEC) has dropped Biden-era cases against multiple well-known crypto entities, including Coinbase, Kraken, OpenSea, and Robinhood.
So while we remain short on details, the political climate favors the creation of some sort of a crypto strategic reserve at some point in the near future. A crypto summit on Friday, March 7 might provide some clarity, but my guess is that it will be months before we get a real grasp on what a crypto reserve will look like.
In fact, don’t be surprised if we see a lot of twists and turns along the way.
How a Crypto Strategic Reserve Will Affect Prices
When President Trump first floated the idea of a “Bitcoin National Stockpile,” he suggested that the government could launch it with BTC seized from previous enforcement actions.
But the decision to create a “strategic reserve” that includes multiple cryptocurrencies implies that assets will need to be acquired – most likely purchased on exchanges.
That would make the U.S. government itself a buyer of Bitcoin and the other cryptocurrencies. That’s a major fresh source of demand that will help drive higher prices.
Plus, many states are getting in on the crypto action. Two, Michigan and Wisconsin, have already invested some retirement funds in crypto. And according to CoinDesk, “16 state legislatures are looking at bills to either establish digital assets stockpiles or to allow their state retirement funds to be partially invested in crypto.”
It also stands to reason that a U.S. crypto strategic reserve will influence other nations to follow suit to avoid getting left behind. That’s more buying, and more demand.
As for what to expect for each of the five cryptos that could make the reserve, that very much depends on whether all five make it into the reserve and what their allocation within the reserve will be.
But however it shakes out, Bitcoin will dominate. Even if all four of the others are included, I expect Bitcoin will comprise between 50% and 75% of the reserve.
Even if the reserve ends up being Bitcoin only, that doesn’t mean other cryptocurrencies won’t benefit. When Bitcoin prospers, most other cryptocurrencies do as well.
Back in December I told readers of Stock Picker’s Corner that I saw Bitcoin peaking this year, sometime around the August-October period. I still believe that.
I also set a peak price range from a minimum of about $145,000-$150,000 to a maximum of about $250,000 with $200,000 being the most likely target.
If President Trump can make the strategic reserve happen, it increases the odds we hit the middle-to-high range of that target. In other words, it’s more likely Bitcoin peaks this year at a price over $200,000.
I don’t have individual predictions for the four other cryptocurrencies, but they should at least show significant gains from current prices, even if they fail to set all-time highs.
Finally, while I generally recommend investors buy cryptocurrencies directly rather than use ETFs, those who want to play this strategic reserve with an ETF do have a clear option. The Grayscale Digital Large Cap Fund (GDLC) just happens to be comprised of the exact five cryptocurrencies President Trump has proposed including in the crypto strategic reserve. It’s also heavily weighted to Bitcoin (77%), just as I suspect the strategic reserve will be.