Bitwise CIO: Bitcoin's current short-term weakness is a gift

Author: Matt Hougan, Chief Investment Officer at Bitwise

Translation: TechFlow

The U.S. government established a strategic Bitcoin reserve last week. Let’s pause for a moment and truly absorb the weight of that statement.

After fifteen years of mockery and skepticism since Bitcoin’s inception—being called everything from “pet rocks” to “rat poison squared”—the U.S. government has finally classified Bitcoin as a “strategic” asset and explicitly stated these holdings “shall not be sold.”

This is a historic milestone that will propel Bitcoin to new all-time highs. Credit is due to those who believed in this possibility long before it became fashionable.

But now, we need to talk about how the market has reacted to this news.

Market Reaction and Why It’s Wrong

Despite the historic nature of this announcement, Bitcoin has sharply declined recently. As I write this memo, Bitcoin has dropped 13% from its Thursday peak above $92,000 to below $80,000—a low not seen since November 2024.

Multiple factors contributed to this drop, including heightened economic concerns and broad equity market pullbacks unrelated to the reserve announcement. But there’s no doubt: part of the sell-off was directly tied to the reserve announcement itself.

As this article in Barron’s notes, crypto investors were disappointed because the government did not announce immediate plans to purchase additional Bitcoin. Instead, it said the reserve would be funded by seized assets already held by the federal government.

This market disappointment is absurd on several levels.

First, simply committing *not to sell* existing government holdings is already a major win. The U.S. currently holds approximately 200,000 Bitcoins, worth around $16 billion. Under the previous administration, most or all of these were slated for sale in 2025. Removing this potential overhang from the market is significant in itself.

Second, I believe the market is severely underestimating the likelihood that the government will soon begin acquiring more Bitcoin. I urge you to read the full executive order. It clearly states:

“The Secretary of the Treasury and the Secretary of Commerce shall develop strategies to acquire additional government Bitcoin holdings, provided such strategies are budget-neutral and impose no additional costs on U.S. taxpayers.” (emphasis added)

Note the use of “shall,” not “may” or “can.” Having served as a speechwriter for federal officials, I can tell you that language in official documents is carefully chosen.

“Shall” carries specific meaning here—and the market appears to have missed it entirely.

But the most absurd aspect of market skepticism is that investors are focusing on the wrong question altogether.

The Only Question That Matters About Bitcoin

For long-term investors, the only question that matters about Bitcoin is this: Will Bitcoin become a globally significant macro asset with geopolitical importance, akin to gold?

Will more nations add Bitcoin to their strategic reserves… or fewer? Will more sovereign wealth funds invest in Bitcoin… or fewer? Will its role in global financial markets grow larger… or smaller?

If Bitcoin does indeed become globally significant—and I believe it will—it will become a $10–50 trillion asset, implying 5x to 25x upside from current levels. If not, it will remain a historical footnote, lingering below $150,000, supported only by a small group of libertarians, cypherpunks, and speculators.

There is no middle ground. Bitcoin is either globally significant—or it isn’t.

Keeping this central question in mind helps filter out short-term noise. Would it be nice if the government immediately bought 100,000 Bitcoins? Of course—it might instantly lift prices 20% from current levels. I wouldn’t complain.

But that pales in significance compared to whether Bitcoin becomes a major global macro asset. From this perspective, the strategic reserve is a massive step forward. It’s the U.S. government officially signaling to the world: “Bitcoin matters.” This sends a powerful message to other nations considering their own strategic reserves—from the Czech Republic and El Salvador to China, Russia, and India. Do you think they’d rather enter before or after the U.S. makes a big move?

And that’s why, despite current investor anxiety and market volatility, I see only one important conclusion:

This short-term weakness is a gift.