Crypto Markets Are Misreading Trump’s Strategic Reserve, Says Bitwise CIO

The crypto markets have whipsawed following President Donald Trump’s unexpected announcement of a strategic crypto reserve over the weekend. Bitwise Asset Management’s Chief Investment Officer (CIO), Matt Hougan, contends that traders are overreacting to the proposed plan’s details and missing what could be a bullish development for digital assets.

Late Sunday, President Trump revealed a United States government initiative to acquire and hold five different cryptocurrencies—Bitcoin, Ethereum, Solana, XRP, and Cardano—in a strategic reserve. Initially, the market response was emphatically positive: Bitcoin’s price surged from around $85,000 to $95,000. However, as Hougan notes in his latest investor memo, that initial 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 points to overly narrow market interpretations as the principal cause behind the abrupt retracement. “The market is overthinking things. For all the flaws in the rollout, the reserve news is bullish.”

He elaborates on why the proposal is not being greeted with lasting enthusiasm. A large part of the skepticism centers on the White House’s choice of five cryptocurrencies, which critics describe as an overly broad selection. In Hougan’s words: “The inclusion of speculative assets like Cardano feels more calculating than strategic.”

Although the plan initially seemed like a vote of confidence from Washington, some crypto commentators—such as Coinbase CEO Brian Armstrong and Castle Island Ventures Founder Nic Carter—have questioned the rationale behind broadening the reserve beyond Bitcoin. Bitwise CEO Hunter Horsley also weighed in shortly after the announcement, publicly expressing a preference for a more conservative, bitcoin-centric reserve.

Despite this, Hougan’s memo argues that market participants may be failing to see the bigger picture. In the memo, Hougan outlines three major takeaways regarding the strategic reserve plan.

Hougan 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.”

According to Hougan, the announcement further cements the perception of Bitcoin as a strategically important asset. He believes this could spur competing nations to follow suit, mirroring smaller-scale adoption already seen in El Salvador, Bhutan, and Abu Dhabi. “If you are Honduras, Mexico, or Guatemala, and you’re watching El Salvador and now the US acquire bitcoin, can you really afford to be at zero?”

Hougan also points to the political calculus, suggesting that even a future administration with different views might not divest the reserve once it exists. He notes that the US has historically held onto strategic assets, such as gold, for extended periods. “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 the 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. Hougan, however, believes that “the final reserve will be nearly entirely bitcoin, and it will be larger than people think.”

He also underscores a broader point: The simple acknowledgment by the US 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.

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 US 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.