President Donald Trump recently signed an executive order to evaluate whether the U.S. should establish a national stockpile of digital assets, per NBC News. One of Trump’s promises during his campaign was to create a “strategic Bitcoin reserve” similar to the Strategic Petroleum Reserve.
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The order partly delivers on his promise, signaling changes are beginning to happen. Here’s how economists think a national Bitcoin stockpile could impact the economy.
Also see why experts are calling Bitcoin digital gold — and what it means for investors.
Hedge Against Inflation
As of November 2024, the U.S. government owned over 207,000 Bitcoin, according to Forbes. And increasing its holdings via a reserve could impact inflation, according to experts.
“The government can keep doing what it is currently doing, holding Bitcoin, but create a policy to keep it as a strategic Bitcoin reserve. This policy shift would signal to the market that it’s not looking to liquidate. In response, the market would likely send Bitcoin price higher and increase the asset value, which, in turn, would increase the spending power for millions of Americans,” said Neil Bergquist, CEO and co-founder of Coinme.
James Toledano, chief operating officer of Unity Wallet, thinks that a strategic Bitcoin reserve will act as a hedge against inflation and currency devaluation. “This strategy could enhance national financial stability, potentially leading to a stronger economy and more robust currency. It will also offer diversification beyond traditional assets like gold, silver and foreign currencies,” he said.
“Should Trump decide to leverage this stash as the foundation for a U.S. strategic Bitcoin reserve, it could mark a pivotal shift in our economic landscape. Not only would this move diversify our national reserve with an asset that has historically decoupled from traditional markets, but it could also serve as a subtle yet effective tool in fighting inflation,” said William Zielke, chief revenue officer of BitPay.
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Accelerate Cryptocurrency Adoption
Since the U.S. government is among the largest Bitcoin holders globally, establishing a reserve could accelerate the adoption of cryptocurrency.
“If Bitcoin were adopted as a national reserve in the U.S., it could accelerate cryptocurrency adoption within the economy. Businesses might integrate crypto payments more actively, leading to innovations in cross-border transactions, with cryptocurrencies taking on a role similar to gold in the past,” said Anton Chashchin, founder of N7 Capital.
Doing so could bolster the legitimacy of Bitcoin. “If the U.S. moves forward with a strategic Bitcoin reserve, it would strengthen Bitcoin’s legitimacy and influence how governments approach digital assets. A sovereign reserve would reinforce Bitcoin’s role as a store of value, potentially encouraging other nations and institutions to integrate BTC into their long-term portfolios,” said Charles St.Louis, CEO of Delv.
Help Pay Down Government Debt
The U.S. government currently has over $36 trillion in federal debt. One strategy the government could use to reduce national debt is investing in assets that appreciate faster than inflation or the growth of its debt.
Bitcoin has been appreciating since inception, albeit with volatility along the way, and it could continue to go up if Trump’s strategic Bitcoin reserve comes into fruition. If the U.S. were to acquire 1 million Bitcoin by 2029, according to VanEck, it’s estimated that, by 2049, the reserve could represent 35% of the national debt.
A large Bitcoin stockpile could help the government offset national debt in the coming years.
Bitcoin’s Volatility and Legitimacy Are Concerns
While some experts agree that a stockpile could bring many benefits, there are also concerns. Per NPR, a lot of critics are sounding the alarm about “serious consequences” due to Bitcoin’s volatility. Because of that, the U.S. government would be more exposed if Bitcoin were to see a steep drop.
Some Bitcoin critics also don’t see the cryptocurrency as anything but a speculative asset, NPR reported. “We need something that isn’t going to be inflated away, something hard and real in reserve. What’s ridiculous is that nothing could be less hard or real than bitcoin,” Hilary Allen, professor at the American University Washington College of Law, told the Financial Times.
It remains to be seen whether Trump will establish a strategic Bitcoin reserve — and what the effects will be on the economy. While there could be a lot of benefits, there are also concerns to be aware of.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: How Trump’s ‘Strategic Bitcoin Reserve’ Could Affect the Economy in 2025
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