Calls for the United States to establish a national Bitcoin (BTC) strategic reserve have sparked concern among market watchers, who warn of potential disruptions to both cryptocurrency prices and the U.S. dollar. Haider Rafique, global managing partner for government and investor relations at crypto exchange OKX, argues that concentrating large amounts of BTC on a government balance sheet could undermine Bitcoin’s core appeal as neutral, decentralized money. He posed a pointed question: “What happens in a few years if a new administration decides this was a bad idea?” Rafique added, “Despite recent bipartisan support for crypto, it is essential to remember that administrative policies can change quickly. As circumstances change over time, the concentration of large amounts of BTC on a country’s balance sheet could represent a liquidation risk.” Government Ownership Could Distort Markets Rafique warns that governments holding significant portions of the BTC supply would be able to manipulate prices by selling large amounts at once. Such a move could shock markets and undercut investor confidence in the cryptocurrency’s independence from state control. Germany’s sale of 50,000 BTC in 2024, which helped keep prices below $60,000, serves as an example of how government action can weigh on the market, Rafique said. Impact on the Dollar and Financial Markets Beyond crypto itself, a U.S. Bitcoin reserve could signal weakness in the dollar, which underpins global finance. Rafique warned that establishing a BTC reserve “would be a loss of confidence in the dollar.” He argued that building a strategic reserve would tell investors the U.S. currency cannot sustain its value solely on economic fundamentals. This could push investors to safe havens like gold or the Swiss franc while sparking sell-offs of riskier assets. Rafique predicted such a chain reaction could trigger cascading liquidations across financial markets, ending in a sharp downturn as participants respond to a seismic shift in global finance. Clashing with Bitcoin’s Original Ethos Bitcoin advocates have long promoted the idea of nation-state-level treasuries as a path to making the cryptocurrency the global reserve asset. However, critics warn that state-level control conflicts with Bitcoin’s decentralized design. Centralized ownership could weaken its credibility as a currency that transcends politics and national boundaries. Timing and Strategy Questions Remain Some proponents argue a U.S. reserve would strengthen America’s monetary position and accelerate Bitcoin’s adoption as a unit of account. But others urge caution, citing political risk and the volatility of the cryptocurrency market. Without clear rules for accumulation and liquidation, a government reserve could transform from a strategic asset into a destabilizing liability. As debate intensifies, policymakers face the challenge of integrating Bitcoin into national policy without compromising its foundational principles or global market stability.
