US Government Establishes Strategic Bitcoin Reserve, Bitcoin Price Surges
1min read In a significant move, the US government has established a strategic Bitcoin reserve, aiming to acquire more coins through budget-neutral strategies. This initiative, outlined in an executive order by President Trump, involves adding Bitcoin through asset forfeitures and potentially converting other reserve assets into the cryptocurrency. The US maintains strategic reserves covering various assets, including gold, petroleum, natural gas, foreign currency, and critical minerals.
The most liquid of these strategic reserve assets are petroleum, gold, and foreign currency. The US Strategic Petroleum Reserve holds approximately 395 million barrels of crude oil, valued at over $26.4 billion. The US Treasury holds over 258.6 million troy ounces of gold, valued at over $10.9 billion. Additionally, the Treasury Department’s convertible foreign currency reserves total over $35 billion. These assets could potentially be converted to Bitcoin, significantly boosting its market capitalization.
Senator Cynthia Lummis introduced the Bitcoin Act in July 2024, proposing that the US government acquire 5% of Bitcoin's total supply, amounting to 1 million BTC. The bill suggests holding Bitcoin for 20 years as a hedge against inflation. In November 2024, Lummis suggested converting some US gold reserves to Bitcoin as a budget-neutral way to purchase the 1 million BTC, which would have cost approximately $90 billion at the time. This move aligns with the administration's view of Bitcoin as a unique store of value, often referred to as "digital gold."
On March 6, President Trump issued an executive order establishing the "Strategic Bitcoin Reserve and United States Digital Asset Stockpile." This order recognizes Bitcoin's unique attributes within the cryptocurrency space, highlighting its fixed supply and role as "digital gold." The reserve will initially be funded with Bitcoin seized during criminal or civil asset forfeiture proceedings, as well as any Bitcoin held by other government agencies. Estimates suggest around 200,000 bitcoins fall within this definition, making the US one of the largest long-term holders of Bitcoin.
The initial capitalization of the reserve is a significant step towards achieving the goal outlined in the Bitcoin Act. The order also contemplates future purchases of Bitcoin for the reserve, instructing the Secretary of the Treasury and the Secretary of Commerce to develop strategies for "budget neutral" acquisition. One such strategy involves repr 