Bitcoin’s Future Comes Down To This One Question, Says Bitwise

3 months ago

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The US President Donald Trump has formally established a strategical Bitcoin reserve past week—an enactment that has ignited some solemnisation and interest crossed the industry. At the bosom of this statement is 1 cardinal question: Will Bitcoin go a geopolitically important planetary macro plus similar gold, oregon volition it stay a niche holding among libertarians, cypherpunks, and speculators?

That is the halfway takeaway from Bitwise’s latest investor memo, authored by Chief Investment Officer Matt Hougan. Titled “The Only Question That Matters successful Bitcoin” and dated March 10, 2025, the memo underscores however the semipermanent prospects of Bitcoin whitethorn hinge connected whether governments worldwide—starting with the United States—view it arsenic indispensable capable to support gathering strategical reserves.

The One Big Question For Bitcoin

In the memo, Hougan highlights the striking quality of the US government’s decision, writing: “Fifteen years aft Bitcoin was created—a decennary and a fractional of ridicule and skepticism, of radical calling it a ‘pet rock’ and ‘rat poison squared’—the US authorities declared Bitcoin a ‘strategic’ plus that ‘shall not beryllium sold.’”

He argues that Bitcoin’s endorsement arsenic a strategical reserve asset signals a historical shift: “It is simply a historical milestone, which successful clip volition assistance propel Bitcoin to caller all-time highs. Congratulations to each who believed successful this anticipation earlier it was cool.”

Yet, markets person not uniformly welcomed this announcement. While the government’s ceremonial designation would look to bolster Bitcoin’s legitimacy, it besides disappointed immoderate investors who had expected an contiguous influx of caller authorities purchases.

Shortly aft the reserve quality emerged, Bitcoin’s terms plummeted 13% from its caller precocious of implicit $92,000, dropping beneath $80,000 for the archetypal clip since November 2024. Hougan points to respective contributing factors: broader economical worries, an equity marketplace pullback, and, crucially, what helium calls a “misunderstanding” of the government’s existent stance.

“Despite the historical quality of the declaration, Bitcoin is down sharply successful caller days,” helium notes successful the memo. Investors had seemingly hoped for contiguous large-scale purchases from the US Treasury. Instead, they learned that the reserve would initially comprise the government’s existing Bitcoin holdings—an estimated 200,000 BTC, worthy astir $16 cardinal astatine existent prices.

Hougan believes the market’s antagonistic absorption is unwarranted, emphasizing that simply retaining those 200,000 Bitcoin alternatively of selling them—once anticipated nether the anterior administration—removes a important overhang from the market.

Moreover, the caller enforcement bid explicitly states: “[T]he Secretary of the Treasury and the Secretary of Commerce shall make strategies for acquiring further Government BTC provided that specified strategies are fund neutral and bash not enforce incremental costs connected United States taxpayers.”

In his memo, Hougan underscores the value of the connection “shall,” suggesting it indicates a mandate alternatively than a specified possibility. Above all, Bitwise’s memo insists connected a semipermanent perspective, urging investors to ore connected what Hougan presumption “the lone question that matters successful Bitcoin.” That question is whether Bitcoin becomes globally important, akin to gold, oregon whether it remains peripheral.

“If Bitcoin does substance globally, here’s my view: It volition beryllium a $10-50 trillion asset, implying a 5x-25x instrumentality from existent prices. If it doesn’t, it’ll beryllium a footnote successful history, bouncing astir beneath $150,000, supported lone by a tiny cohort of libertarians, cypherpunks, and speculators. There is nary successful between. Bitcoin either matters globally oregon it doesn’t,” Hougan writes.

From this vantage point, the US government’s prime to clasp (and perchance expand) its Bitcoin holdings represents an tremendous awesome to different countries. If, arsenic Hougan suggests, nations including Czechia, Russia, China, El Salvador, and India are weighing their ain strategical moves successful the integer plus space, the US adopting Bitcoin arsenic strategical could spur them to travel suit—especially if they privation to front-run immoderate further American acquisitions.

While immoderate investors whitethorn beryllium disheartened by the contiguous deficiency of massive authorities buys, Bitwise’s memo remains optimistic successful the look of Bitcoin’s caller volatility. Hougan labels the existent terms dip arsenic an accidental for those eyeing a longer timeline. “I spot 1 large takeaway. This short-term weakness is simply a gift,” helium concludes.

At property time, BTC traded astatine $80,319.