U.S. President Trump’s announcement last weekend about the formation of a strategic crypto reserve in the U.S. is bullish despite the market’s subsequent reaction, asset manager Bitwise said in a research report Tuesday.
Crypto markets soared following the news, but by Monday had given back all these gains.
Bitwise noted that investors became disgruntled with the announcement because the planned reserve will hold tokens other than just bitcoin (BTC).
The President announced that XRP, solana (SOL) and cardano (ADA) would be included in a strategic reserve, and later added bitcoin and ether (ETH) to the list of assets.
“The inclusion of speculative assets like cardano feels more calculating that strategic,” wrote Matt Hougan, chief investment officer at Bitwise, adding that despite the “flawed rollout” the market has got it wrong.
“Trump’s initial proposal is rarely his final,” the report noted, and the final reserve will likely be comprised of almost entirely bitcoin. It will also be larger than the market is expecting.
If the U.S. does establish a strategic crypto reserve, other nation states will likely follow suit, Bitwise said, and any digital assets that are acquired will likely be held for a significant amount of time.
“The U.S. government declaring crypto assets ‘strategic’ is bullish,” and the market will eventually come round to this way of thinking, the report added.
Read more: U.S. Crypto Strategic Reserve More Likely, Further Details Needed: Citi