Donald Trump’s Bitcoin Reserve gamble: A masterstroke or a missed opportunity?

In a historic moment for the global crypto industry, U.S. President Donald Trump has signed an Executive Order to establish a "Strategic Bitcoin Reserve" comprising Bitcoin (BTC) seized by U.S. government law enforcement agencies. This was one of Trump’s key campaign promises, following which the entire cryptocurrency community rallied behind him, providing crucial support for his re-election in the presidential polls held in November 2024.

The Crypto Reserve is akin to a digital Fort Knox for cryptocurrency, often referred to as “digital gold” due to its scarcity and security, having never been hacked. It will hold seized assets from criminal and civil proceedings. While signing the order, Trump vowed to make the United States the “crypto capital of the world,” emphasising the need to embrace digital assets to drive economic growth and technological leadership.

The U.S. government has historically sold all the Bitcoin it had seized. This move, however, could provide a significant boost to Bitcoin’s long-term price action. David Sacks, founder of investment firm Crat Ventures and the White House AI and crypto tsar, stated that the Executive Order underscores Trump’s commitment to making the U.S. the “crypto capital of the world.”

Experts agree that with a fixed supply of 21 million coins, there is a strategic advantage in being among the first nations to create a Strategic Bitcoin Reserve.

Over the past decade, the U.S. federal government has sold approximately 195,000 Bitcoin, generating proceeds of $366 million. "Had the government held onto the Bitcoin, it would be worth over $17 billion today. That’s how much it has cost American taxpayers not to have a long-term strategy. The Reserve will be capitalised with Bitcoin forfeited to the federal government as part of criminal or civil asset forfeiture proceedings, meaning it will not cost taxpayers a dime," Sacks said.

It is estimated that the U.S. government currently owns about 200,000 Bitcoin; however, there has never been a complete audit. Trump's order also mandates a full accounting of the federal government’s digital asset holdings. The U.S. will not sell any Bitcoin deposited into the Reserve, which will be preserved as a store of value.

"Premature sales of Bitcoin have already cost U.S. taxpayers over $17 billion in lost value. Now, the federal government will have a strategy to maximise the value of its holdings," Sacks stated. Additionally, the U.S. government has directed the Secretaries of Treasury and Commerce to develop budget-neutral strategies for acquiring additional Bitcoin, provided they do not incur incremental costs for American taxpayers.

U.S. Digital Asset Stockpile

Trump's Executive Order also establishes a U.S. Digital Asset Stockpile, consisting of digital assets other than Bitcoin that have been forfeited in criminal or civil proceedings. The U.S. government will not acquire additional assets for the Stockpile beyond those obtained through forfeiture. "The purpose of the Stockpile is responsible stewardship of the government’s digital assets under the Treasury Department," the order states.

Impact on the Global Crypto Industry & Implications for India

Indian cryptocurrency stakeholders are urging the country to adopt a more progressive and strategic approach to regulating virtual digital assets. Sumit Gupta, Co-founder of CoinDCX, called Trump’s Strategic Bitcoin Reserve and National Digital Asset Stockpile a "big win" for the global crypto ecosystem. He noted that Trump’s move signals long-term institutional adoption of crypto.

"This move will likely push India to rethink its cautious stance on crypto. Senior leaders have already mentioned that they are tracking U.S. developments closely and working on a consultation paper. Global reserve status for BTC could incentivise more Indian institutions to diversify into crypto assets. Regulatory collaboration will likely be discussed at today’s White House Crypto Summit," Gupta added.

On the significance of the development, Gupta said the scarcity-driven strategy ensures "early reserves grant geopolitical leverage" and helps position the U.S. as the “crypto capital of the world.” Additionally, he stated that the Digital Asset Stockpile would consolidate non-Bitcoin cryptocurrencies seized through forfeitures. "Unlike the Bitcoin Reserve, the Treasury may strategically sell assets from this stockpile to avoid market disruptions," he noted.

Ashish Singhal, Co-founder of CoinSwitch, called Trump's move a "pivotal moment" in the mainstream recognition of crypto as a legitimate store of value. "By building reserves through enforcement actions rather than taxpayer funds, the U.S. has signalled its intent to embrace the future of digital finance. While the market initially reacted with mixed signals, the long-term implications are undeniably bullish—clearer regulations, reduced uncertainty, and a stronger foundation for institutional adoption."

Singhal said this is a wake-up call for India, where tax policies have driven crypto startups to relocate abroad. "The U.S. is fostering innovation and attracting top talent by providing policy clarity. Meanwhile, India’s current approach of taxing crypto at the highest brackets continues to drive entrepreneurs and investors overseas. If we want to lead in Web3, we need progressive regulations, a supportive innovation ecosystem, and an environment where the next generation of crypto pioneers can thrive. The time to act is now."

Srinivas L, CEO of 9Point Capital, called Trump’s Bitcoin Reserve order a "brilliant" move that leverages seized Bitcoin to bolster U.S. financial strength without burdening taxpayers. However, he criticised the U.S. Digital Asset Stockpile, which includes volatile lesser-known cryptocurrencies, arguing that it dilutes focus and risks instability. "Using only seized assets, rather than new purchases, explains the market’s muted response in Bitcoin’s price action. The Bitcoin Reserve deserves applause for its fiscal prudence and vision, while the broader stockpile’s inclusion of shaky altcoins undermines the strategy," he said.

How the Markets Reacted

Market reaction to Trump's Bitcoin Reserve move was slightly negative, as investors had expected the U.S. to deploy fresh capital into Bitcoin. However, for now, even though the White House is referring to Bitcoin as "digital gold," it has decided against purchasing new BTC.

On Friday, Bitcoin extended its losses, dipping near $84,700. At the time of this report, around 4:37 PM (IST), the world’s largest cryptocurrency was trading at $89,257, down 2.35% in the past 24 hours. Experts anticipate further improvements, with investors hopeful for a new crypto policy soon. Ethereum was trading at $2,201.94, down 4.21% in the past 24 hours, while XRP was down 2.60%. Cardano dropped 6.72%, and Solana traded 4.89% lower at $144.47.

Who Owns the Largest Share of Bitcoin?

The U.S. holds the largest Bitcoin reserves, valued at approximately $17 billion (around 200,000 BTC), primarily seized from black-market activities by the FBI, according to data from crypto intelligence firm Arkham Intelligence. China follows closely with 194,775 confiscated BTC. The U.K. and Germany hold 61,000 and 50,000 seized bitcoins, respectively.

Some nations have taken an even more proactive approach. Bitcoin holds legal tender status in El Salvador and the Central African Republic. El Salvador has purchased 6,043 BTC, with President Nayib Bukele announcing in 2022 that the country buys at least one Bitcoin daily. Since the start of its conflict with Russia, Ukraine has received Bitcoin donations worth $22.8 million, with public officials estimating ownership of over 46,000 BTC.

India’s neighbour Bhutan has also heavily invested in Bitcoin mining, leveraging its cheap hydroelectric power to mine more BTC.

Additionally, both listed and non-listed companies, as well as ETFs in the U.S., hold significant crypto assets. Michael Saylor’s MicroStrategy is the largest corporate holder of Bitcoin, with 430,000 BTC, according to Bitcoin Treasuries data.