The U.S. government’s push to establish a strategic Bitcoin reserve is igniting interest from global investors, institutions, and rival nations, setting the stage for a potential cryptocurrency arms race.
The United States has quietly emerged as the largest governmental holder of Bitcoin, amassing approximately 198,000 coins as of mid-April 2025. This position places Washington ahead of rivals like China, the United Kingdom, and Ukraine, according to Bitcoin Treasuries data.
Bitcoin ETFs have also surged since their regulatory approval in January 2024, with the iShares Bitcoin Trust (IBIT) now holding an even greater Bitcoin cache than Strategy, the company formerly known as MicroStrategy.
Despite the White House’s formal announcement of the strategic reserve plan, Bitcoin prices and related stocks reacted with only modest swings. Following the executive order, Bitcoin briefly dropped below $85,000 — down from $90,600 — before rebounding above $95,000 later in April.
Strategy stock, battered by a three-month pullback, saw a sharp recovery, climbing nearly 44% since late February. Meanwhile, iShares Bitcoin ETF, which had been trending downward, rose 3% the week of the announcement before stabilizing and then surging again in April. Bitcoin mining companies, such as Hive Digital Technologies and TeraWulf, experienced minimal market impact.
A Strategic Move Beyond Price Gains
For Bobby Zagotta, president of Bitstamp U.S., the reserve initiative is less about immediate price action and more about long-term value diversification.
“From my standpoint, the reason for having it is for the U.S. government — and the Treasury specifically — to diversify and expand their value base in a new way,” he said.
“If that increases the price of bitcoin over time, great,” Zagotta added. “But that shouldn’t be misconstrued as the driver.”
Greg Benhaim, vice president of product at digital asset manager 3iQ, views the move as a “net benefit to bitcoin and the industry,” highlighting Bitcoin’s unique role as a digital store of value.
“Most crypto investments are more akin to early-stage tech venture investments, whereas bitcoin is much more entrenched, almost like digital gold, or a store of value, coded monetary policy, and it’s much more battle-tested,” Benhaim said.
Governments Enter the Bitcoin Arena
The United States is now the first major country to formalize Bitcoin as a strategic asset. In contrast, El Salvador’s earlier attempt to adopt Bitcoin as official currency met with mixed results — significant early gains offset by steep implementation costs, leading to a downgrade of Bitcoin’s legal status in 2024.
Elsewhere, nations such as the United Arab Emirates, Switzerland, Singapore, Nigeria, Ethiopia, Kenya, and Argentina are advancing crypto adoption but have yet to establish official reserves.
Binance CEO Richard Teng revealed that “quite a number” of governments and sovereign wealth funds have approached the exchange to explore creating reserves. While Teng declined to specify countries, Binance has partnered with Pakistan and Kyrgyzstan to build crypto frameworks.
Despite global momentum, the U.S. remains dominant with nearly 200,000 Bitcoin, followed by China with 190,000, the U.K. with 61,245, and Ukraine holding over 46,000 coins.
Budget-Neutral Bitcoin Buying
Though no official purchasing plan has been unveiled, Benhaim suggests the U.S. could buy Bitcoin without raising taxpayer costs — by selling gold reserves or using tariff revenues.
Pre-announcing purchases would be risky, Benhaim said: “The equivalent of Warren Buffett saying I’m going to buy a bunch of Apple stock over the next year. Everyone will buy it and sell it to me.”
Meanwhile, the Bitcoin Act of 2025, proposed by Sen. Cynthia Lummis and Rep. Nick Begich, aims to acquire one million Bitcoin over five years, though it faces a steep climb in a divided Congress.
Innovating U.S. Debt Refinancing
Crypto advocates have proposed using Bitcoin to bolster U.S. debt instruments. The Bitcoin Policy Institute and VanEck have each floated “BitBonds” — bonds partially backed by Bitcoin — projecting substantial potential interest savings over a decade.
Matthew Sigel, VanEck’s head of digital asset research, proposed a bond structure giving investors Bitcoin-linked returns up to 4.5% annually, with excess profits split evenly between bondholders and the government.
States Move Faster Than Washington
As federal action remains uncertain, U.S. states are aggressively moving ahead. Texas, Arizona, New Hampshire, Florida, and others have proposed or passed legislation to create state Bitcoin reserves.
Sigel noted states have unique incentives: “And these state gambits in the aggregate could account for billions of dollars of bitcoin buying.”
Limited Impact on Supply — For Now
Despite rising holdings, national governments still control less than 2.5% of Bitcoin’s total 21 million coin supply. ETFs and funds hold a larger 6.17%, while public and private companies account for nearly 5%.
Current mining rates generate about 164,000 Bitcoin annually — roughly $15.5 billion at current prices — a supply absorbed largely by ETFs alone.
Sigel sees government Bitcoin buying as additive, but not essential: “But with only $13 billion a year of issuance, any amount is additive.”
Bitcoin’s Long-Term Prospects
Bitcoin rallied above $87,000 on April 21 amid a gold price surge and a weakened dollar. While up 3% in 2025, Bitcoin has gained over 37% since November’s U.S. presidential election.
Bitstamp’s Zagotta remains optimistic, expecting regulatory progress to boost momentum. Benhaim stresses the long-term view, while Sigel believes that easing macroeconomic uncertainty could catalyze another Bitcoin outperformance cycle.
Despite its volatility, Bitcoin has consistently outpaced the Nasdaq over most recent five-year periods, underlining its growing stature as a major investment asset.
