Donald Trump just made a surprising announcement that could impact the value of the US dollar—and, by extension, your buying power abroad. His proposed U.S. Crypto Reserve has sparked debate, with some seeing it as a smart financial hedge and others as political maneuvering. But whether you support the idea or not, one thing is clear: if the U.S. government starts stockpiling crypto, the ripple effects could be significant.
A crypto reserve would function much like other U.S. strategic reserves—gold, petroleum, uranium—helping the government hedge against financial crises. The idea is that holding a strategic amount of crypto could bolster the dollar’s standing and provide diversification against fiat currency volatility. Some argue it could even help pay down America’s debt if crypto values soar.
Now, onto the specifics…
Trump Announces the Coins to Go in His Crypto Reserve…
Forget “Make America Great Again.”
Donald Trump is looking to make crypto great again…
And that has riled up those who love to be riled up!
Maybe you saw Trump’s recent announcement that he will create a cryptocurrency reserve for America. As DJT put it in a social media post:
A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA. I will make sure the U.S. is the Crypto Capital of the World. We are MAKING AMERICA GREAT AGAIN!
A bit later, he clarified to add that “obviously, BTC and ETH, as other valuable cryptocurrencies, will be at the heart of the Reserve. I also love Bitcoin and Ethereum!”
(Just to clarify all the acronyms: XRP is Ripple, SOL is Solana, ADA is Cardano, and BTC/ETH are Bitcoin and Ethereum, the two Grand Poohbahs of the cryptoconomy.)
To launch America into the crypto future, Trump convened a crypto summit on Friday, March 7, bringing together policymakers and industry leaders to begin shaping the policies and regulations that will define the industry moving forward.
Now, as you know, if you read my Global Intelligence newsletter, I am a huge crypto fan. I’ve been writing about crypto for years, and I’ve been involved in this space since 2017, when I first started building rigs from computer parts to digitally mine Ethereum and a crypto called Z-Cash.
While I am a fan of crypto, and while I see the blindingly bright future that crypto is already beginning to usher in, I know a lot of people aren’t fans and don’t understand crypto.
I’ve seen oodles of news reports quoting people who insist that crypto is a Ponzi scheme and that this is just another Trump Family Pump-n-Dump Money Grab, Day #476.
It may well be. Nevertheless, two things can be true at once. Trump may be happy to boost these assets so he/his family/his circle can profit by buying before they make these big announcements and then selling after they make big announcements that boost prices. At the same time, a strategic reserve can be smart.
I think it is, and I’ll explain why… though there are some obvious dangers to be aware of as well.
Is Trump’s Crypto Reserve a Game Changer?
How will this impact your investments? Stay ahead of the curve with expert insights.
The U.S. government’s move into crypto could have major implications for the dollar, global markets, and your wealth. Stay informed with Field Notes, Jeff D. Opdyke’s free e-letter, where he shares expert insights on the latest financial shifts and how to navigate them.
Sign up today and get exclusive access to his video report, Earning Income From Crypto and NFTs.
What is a Crypto Reserve?
I guess the best way to think about this is to consider an emergency savings account families often have—a source of money on hand purely for emergencies or maybe for buying a house.
Only, in this case, Trump wants to build a reserve from certain cryptocurrencies.
America has other reserves, including the Strategic Petroleum Reserve, a uranium reserve that Congress established in 2020, and of course there’s the gold at Fort Knox (which Elon Musk is so set on eyeballing)… as well as strategic reserves for grain, home heating oil, and vaccines/antidotes/anti-toxins. (We once had reserves for helium and raisins.)
All are designed for the US government to draw upon in emergencies—though what defines “emergency” is not clearcut.
A crypto reserve would hold a strategic amount of crypto, aimed to help the US diversify its financial holdings, which could help it better weather another global financial crisis. Basically, a giant financial hedge against “fiat currency” collapse (that’s currency not backed by a hard asset, like gold—the dollar, in other words, is a “fiat currency”), since crypto (particularly bitcoin) tends to be seen as an anti-fiat currency.
What is the Benefit of a Crypto Reserve?
A typical savings account grows only as fast as the rate of interest allows, and right now, that’s low.
Assets such as bonds grow equally slowly. Stocks grow faster, but not nearly as fast as crypto.
So, one of the benefits is that crypto promises to grow far faster than other investment options. Plus, there’s the asset-diversification angle I mentioned above. Crypto, particularly Bitcoin, moves differently than other assets.
A small exposure to crypto can lead to extremely large gains that the government could use to pay down (potentially substantially) America’s outlandish debt.
What’s the Downside?
There are two notable risks to consider: price volatility… and government itself.
Crypto prices move like a manic-depressive. When prices are manic, they’re really manic. We’ve had crypto in my Frontier Fortunes portfolio that were down 92% only to surge so strongly in just a month or two that subscribers were able to lock in gains of more than 330%.
Then again, that same example speaks to the fact that when crypto is in a depressive mood, prices can be down 90% for no real reason other than investor sentiment.
As for government… well, I’m not sharing any secrets here when I say that American politicians over way too many decades have shown the fiscal restraint of a gambler on a never-ending losing streak, who just keeps on borrowing money from anyone he can sweet-talk.
The DC Clown Show will, at some point, see the wealth that has accumulated in the Strategic Crypto Reserve, and it will want to tap into that money to pay for some sop to voters that will help one party or the other get elected. Or a president—Trump or someone else—could see that stash of wealth as a slush fund for some pet project.
So, in my view, the fund would really need to be administered by a third party that could protect it from the whims of meddling politicians.
Why is Trump Doing This?
Cynically, one could say this is just a way for Trump to repay the “crypto bros” whose vote helped usher him into office again. Or, one could say that Trump is just pumping the price higher so that crypto bros close to him can sell into the spike.
And both of those rationales are a solid “maybe.” Impossible to know for a fact.
But there’s another reason: The future.
Crypto is the future. It’s not a Ponzi, a scam, a flim-flam. Whatever.
Very real businesses right now are using crypto technology. I mean businesses you know about: PayPal, Shopify, Mastercard, JPMorgan, Goldmans Sachs, Walmart… the list is long!
They’re moving into crypto for the exact same reason they were quick to adopt the internet 30 years ago: efficiency and the opportunity to earn more money.
Far from being a scam or useless, crypto has real use-cases that cannot be replicated in the non-digital world.
One example: A New York company called Parcl Labs has created a financial product in which every new real estate listing, every sale, and every price change in a specific Metropolitan Statistical Area is captured and turned into a “price per square foot” number for that MSA.
Parcl updates and tracks that number every single day. There’s no way to easily do that in the real world. But on the crypto-based blockchain, Parcl can gather up all the data immediately because of the underlying technology. The closest competitor, Standard & Poor’s Case-Shiller indexes, are three months old at their youngest.
Wall Street traders are already using Parcl.
Trump realizes this future is descending upon us, and he realizes that just as America was an internet leader in those early days (Google, Amazon, Netflix, etc. etc. etc.), the US should be the leader in crypto, which is effectively a new version of the internet.
So, he’s looking to put in place the infrastructure necessary to turn America from a crypto wasteland (which it has been for several years) into “the Crypto Capital of the World,” as he calls it. A strategic crypto reserve is just one, highly visible part of that effort.
The other possibility: Debt.
Trump has made off-hand comments like, “Maybe we’ll pay off the [US’] $35 trillion [debt] in crypto. How do you like that? I’ll write on a little piece of paper, ‘$35 trillion crypto’ — we have no debt. Right? That’s what I like.”
If the crypto reserve grows large enough in time, the government could very well use profits to pay off some or all of the debt (assuming politicians don’t raid the cookie jar in the meantime.)
Will the Government Buy Crypto On The Open Market Or Build Up The Reserve Through Confiscations?
A bit of both.
The US already owns, by way of confiscation, 207,000 bitcoin, worth about $19 billion (seizures of the proceeds of crime, etc.). And that’s sure to grow here and there from other confiscations. It also owns about $100 million worth of Ethereum.
But to build the reserve, Uncle Sam would be buying crypto on the open market.
Wyoming Sen. Cynthia Lummis, one of the most vocal crypto proponents in Congress, has said the goal is to buy 200,000 bitcoin every year until the US owns 1 million bitcoin. That would be done on the open market.
Same with buying all the other cryptocurrencies on Trump’s list.
Why These Specific Cryptos?
Hard to say exactly, other than the fact that these crypto are among the largest in the world, as defined by market cap. And some of them are American crypto projects, such as Solana and Ripple, which jibes with Trump’s “America First” brand, and which would fall into his proposal to apply 0% capital gains taxes on US-based crypto projects.
Bitcoin and Ethereum are the two largest cryptocurrencies in the world by market cap. Ripple is #3, Solana is #6, and Cardano is #8. The point being that they are very large and very liquid. Cardano, the smallest of the group, regularly sees daily trading volume in the billions of dollars.
Should I Buy These Cryptocurrencies, And What Does Government Buying Mean For The Price?
I don’t typically throw out buy recommendations outside of my Global Intelligence letter.
But I have said to anyone who will listen that, as a guideline, I suggest everyone should own a minimum 5% of their portfolio in bitcoin.
Owning the others depends on what level of exposure you want to crypto, your tolerance for crypto’s risk and volatility, your personal financial situation, etc.
The others are nice to have; I own them all to various degrees. But at the most basic level, you can own bitcoin and go about your daily life knowing that as the cryptoconomy grows, your wealth will grow too.
As for price… it means higher prices at the margin, but these five crypto aren’t dependent on the US government going on a buying spree. They were doing well before Trump’s interest, and they’ll continue to do well.
What Can the US Do Post-Crypto Reserve That it Can’t Do Now?
Technically, nothing.
A crypto reserve wouldn’t really change anything, just like the gold reserve doesn’t really change anything.
Only… it could actually change a lot.
Paying down the debt, as I mentioned, could be one benefit that the US can’t pursue right now.
Building a financial fortress against a currency crisis is another plus.
The world would very likely look upon the dollar as more than just the cleanest shirt in a very dirty laundry basket of nasty currencies. The dollar would be implicitly backed by America’s crypto holdings (and gold holdings).
That would bolster the dollar in a crisis.
Doesn’t Government Ownership of Crypto Undermine Crypto’s Original Ideals?
When Satoshi Nakamoto launched bitcoin 15 years ago, he did so with this phrase etched into the coding of the very first bitcoin: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
It was commentary on how governments easily devalue fiat currencies to protect banks and business at the expenses of people. Crypto, he saw, was the antidote because it took control of a currency out of government hands.
A crypto reserve does not change that.
The US or other governments cannot control Bitcoin because they don’t control the network on which Bitcoin exists. No one controls it because everyone who runs a Bitcoin node controls it. I won’t dive into nodes, just know that they control the network, and the government would have to take control of the nodes (nearly 22,000 globally at the moment) to control bitcoin… and that will never happen.
So, a crypto reserve does not change the ideal that crypto was built to protect humanity from the worst financial inclinations of politicians and the governments they corrupt.
I’m for it—100%.
Could the government screw it up by letting politicians raid the reserve? Sure.
But that is why I have my own crypto reserve, and why I encourage you to build your own reserve too.
Is Trump’s Crypto Reserve a Game Changer?
How will this impact your investments? Stay ahead of the curve with expert insights.
The U.S. government’s move into crypto could have major implications for the dollar, global markets, and your wealth. Stay informed with Field Notes, Jeff D. Opdyke’s free e-letter, where he shares expert insights on the latest financial shifts and how to navigate them.
Sign up today and get exclusive access to his video report, Earning Income From Crypto and NFTs.
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