As Bitcoin gains mainstream acceptance, nations and institutions are beginning to treat it as more than just a speculative asset—with some looking to stockpile it as a strategic reserve, much like gold.
A strategic Bitcoin reserve is a stockpile of BTC held by an entity, such as a government or institution, for strategic or financial purposes. In 2024, leading up to the U.S. Presidential election, then-candidate Donald Trump and others proposed the establishment of a strategic Bitcoin reserve for the United States.
Advocates argue that creating a national stockpile of Bitcoin and other cryptocurrencies would stabilize markets, and position the U.S. as a leader in the digital asset space.
Here’s how it works.
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ToggleWhat is a strategic reserve?
A strategic reserve is a cache of an asset that governments or institutions hold to maintain stability, respond to crises, or influence markets.
Examples of strategic reserves include:
- ⛽ Strategic Petroleum Reserve (SPR): Established in 1975 by the United States, as an emergency crude oil stockpile. The U.S. Strategic Petroleum Reserve has a maximum capacity of 727 million barrels.
- 💉 Strategic National Stockpile (SNS): Created in 1999 by the U.S. Department of Health and Human Services and the Centers for Disease Control as a U.S. reserve of vaccines, medical devices, and personal protective equipment for use during biological attacks or natural disasters.
- 🛢️ Northeast Home Heating Oil Reserve: Established in 2000, as a stockpile of one million barrels of diesel fuel kept in Connecticut, New Jersey, and Massachusetts to supply the northeastern United States.
- 🍁 Strategic Maple Syrup Reserve: Established in 2000, and maintained by the Canadian government to ensure a stable supply of maple syrup.
Why hold Bitcoin as a strategic reserve?
Bitcoin has been dubbed “digital gold” due to its finite supply, which ensures that no more than 21 million BTC can ever be mined.
The cryptocurrency’s proponents argue that this enables Bitcoin to function as a hedge against inflation and currency devaluation. Thus, a country looking to strengthen its financial resilience might turn to Bitcoin as a strategic reserve in order to leverage its scarcity.
Furthermore, unlike traditional assets such as gold or oil, Bitcoin is decentralized, making it resistant to freezing, confiscation, or destruction by foreign adversaries. When self-custodied, it remains accessible during economic or geopolitical instability.
“A strategic reserve of an asset is usually used to protect against a supply issue or as a financial hedge against fiat currency depreciation,” James Davis, co-founder of crypto futures market platform Crypto Valley Exchange, told Decrypt. “The idea is that Bitcoin can be sold counter-cyclically to support the economy.”
As Davis explained, the true value of a strategic reserve asset lies not in its potential price increase but in its performance during economic downturns.
“Any assets held are usually held to be counter-cyclical to the rest of the economy,” he said. “Strategic reserves are meant to counteract economic cycles,” he said. “What matters isn’t just price appreciation, but how the asset performs during downturns.”
Who is holding Bitcoin as a reserve?
In 2021, El Salvador became the first country to make Bitcoin legal tender. From a game theory perspective, the country took a first-mover advantage by embracing Bitcoin, gaining a competitive edge by being the first to embrace the cryptocurrency and positioning itself as a good place for Bitcoin-focused projects and companies to do business.
Proponents of Bitcoin game theory argue that the possibility of Bitcoin being widely adopted forces others to act—triggering a competitive FOMO effect as other “players” race to secure the remaining supply.
Several countries including the United States, Russia, Brazil, Japan, and Switzerland are now exploring a Strategic Bitcoin Reserve. U.S. Senator Cynthia Lummis (R-WY) formally introduced the “Bitcoin Act” bill in August 2024, with plans accelerating on the inauguration of Donald Trump in 2025.
In March 2025, Trump announced plans for a crypto reserve containing Bitcoin as well as Ethereum (ETH), Solana (SOL), XRP and Cardano (ADA). According to Commerce Secretary Howard Lutnick, Bitcoin will hold a unique status within the reserve, with other cryptocurrencies treated “positively, but differently.”
“The Bitcoin Act states its purpose is to contribute to the economic stability of the United States, provide an innovative hedge against monetary instability, and encourage the integration of digital assets into the U.S. financial system,” Anton Chashchin, founder and CEO of N7 Capital told Decrypt. “In this context, a Bitcoin reserve could offer diversification of assets and act as a protective measure, particularly amid worries surrounding the decreasing value of the dollar.”
While nation states are looking to create Bitcoin reserves, several U.S. States, including Texas, New Hampshire and Ohio, are also eyeing a Bitcoin reserve.
However, plans for Bitcoin reserves have hit headwinds in some U.S. states, with five blocking Bitcoin reserve bills as of March 2025.
Did you know?
Beyond government interest, several publicly traded companies have also amassed significant Bitcoin reserves. Since 2020, the most prolific hoarder of Bitcoin has been Virginia-based Strategy (formerly MicroStrategy). Strategy alone holds 499,096 BTC, worth around $45 billion as of March 2025.
Risks and challenges of a strategic Bitcoin reserve
Holding Bitcoin as a strategic reserve comes with unique risks and challenges that governments and institutions must consider, including Bitcoin’s volatility.
“Crypto’s volatility makes it highly unpredictable compared to traditional assets,” Davis told Decrypt. “It is also pro-cyclical, meaning its value tends to drop when the market requires liquidity the most, making it a risky reserve asset.”
El Salvador has faced pushback from the International Monetary Fund over its Bitcoin adoption, with the financial agency compelling the country not to accumulate Bitcoin “at the level of the overall public sector” as part of a $1.4 billion loan agreement in February 2025, as well as abandoning the cryptocurrency’s status as legal tender. The IMF has long been a critic of El Salvador’s Bitcoin adoption, warning in 2021 that the country’s move to make Bitcoin legal tender raised “a number of macroeconomic, financial and legal issues.”
However, after El Salvador announced the purchase of a further 11 BTC for its reserves in March 2025, the IMF conceded that, “the recent increase in Bitcoin holdings in the Strategic Bitcoin Reserve Fund is consistent with agreed program conditionality.”
How a strategic Bitcoin reserve is managed
How a country manages a strategic Bitcoin reserve depends on its storage method (cold storage or custodial services), diversification with other reserves, transparency, and its role in economic policy.
El Salvador holds “a big chunk” of its Bitcoin reserve in a cold wallet—likely a hardware wallet—stored in a physical vault within the country.
The U.S. government could establish a strategic Bitcoin reserve by retaining its existing Bitcoin holdings, estimated to be around 200,000 BTC ($18 billion) gained through seizures in criminal cases like that of Ross Ulbricht, founder of the Silk Road dark web marketplace.
Managing a strategic Bitcoin reserve will ultimately depend on economic and security considerations. If the U.S. were to establish one, oversight would likely be split between financial and security agencies. For example, the Department of the Treasury would coordinate with the Federal Reserve on monetary policy. Storage might fall under the Federal Reserve Bank of New York if the Bitcoin is treated like gold.
“The management of the acquired Bitcoins will demand strict coordination among various financial services agencies to ensure the asset’s security and functionality,” N7 Capital’s Chashchin said.
He added that the U.S. Treasury department was the “most likely candidate” from the available options for a designated asset manager, which would need to “store, manage, and carry out the necessary transactions with the state-owned Bitcoins.”
The impact of a strategic Bitcoin reserve would depend on careful management, strategic use, and Bitcoin’s evolving role in the global economy.
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