Bitcoin Hits Critical Mass—Morgan Stanley Flags It As Reserve-Grade

Bitcoin could be getting closer to having a place at the government table. Morgan Stanley states that the world’s largest cryptocurrency is now large enough to be held as a reserve asset by the United States. The bank cited Bitcoin’s $1.07 trillion market capitalization as one of the reasons why the notion is no longer a fantasy.

But there’s a catch. Bitcoin still swings too wildly in price. That volatility makes it a risky bet, especially when compared to other reserve currencies like the dollar, euro, or yen. While the numbers show it’s growing, Morgan Stanley warned that stability is still a major issue.

US Eyes Strategic Bitcoin Reserve

With this development, US President Donald Trump went one step ahead. Back in March, the Trump government introduced a new executive order instructing the government to set up a federal institution to hold Bitcoins. It is being discussed similarly as how gold is being deposited with the government in Fort Knox.

A Strategic Bitcoin Reserve is currently on the political agenda. Backers say the action would potentially put the US ahead of the pack in crypto policy and fortify its financial future. Some go so far as to claim it could aid in the national debt.

According to Morgan Stanley’s perspective, if the US were to maintain between 12% and 17% of the top crypto’s supply, it would be comparable to the treatment of other currencies in global reserves. That would involve sitting on about $370 billion in BTC to equal its international market significance.

Serious report by @MorganStanley. -Bitcoin has sufficient market cap to be a reserve, but is more volatile than other reserve currencies. -Volatility is decreasing. -$370b allocation to bitcoin would reflect market cap proportions. -Reserve of 12%-17% of total bitcoin supply… pic.twitter.com/RfFjdobw5Z

— Troy Cross (@thetrocro) May 6, 2025

While this is happening, European governments are maintaining distance. The UK has already dismissed the possibility of holding Bitcoin in reserve. During the FT Digital Asset Summit, Economic Secretary Emma Reynolds indicated that the government will look at regulating crypto and applying blockchain to public finance—but not holding BTC.

In Switzerland, the central bank similarly made a decision: during its annual meeting, Swiss National Bank President Martin Schlegel stated that cryptocurrencies do not provide the long-term protection of value required for reserves. He cited abrupt declines in liquidity as one of the primary threats.

Volatility Still The Main Problem

Whereas Bitcoin enthusiasts can envision the future, money experts reply that price volatility is still too excessive. Bitcoin supporter Troy Cross admitted the high levels of volatility present make it difficult to label the asset as “reserve ready.” But he also stated that if those fluctuations are below important thresholds, the argument for crypto will be a lot more powerful.

Featured image from Gemini Imagen, chart from TradingView