Crypto Strategic Reserve Summit and the wider implications on market prices 09 Mar 2025

Cryptocurrency as a government strategic reserve and macro thinking on cryptocurrency prices

This is a very in-depth article covering the announcement by the US federal government on Friday, 7th March, 2025 to create a strategic cryptocurrency reserve.

We then move onto macro thinking with respect to sound money, inflation, and debt.

The aim of this article are observations to help us understand where the cryptocurrency landscape could go. We have other articles covering opinion on the cryptocurrency and wider economic environment, and insights into trading strategy. We avoid going into too many figures.

Nothing in this article constitutes financial advice and is opinion based. Please do your own research.

Our platform is a cryptocurrency analysis platform designed to help traders understand the market better. We provide visuals and raw data available through our API.

The announcement of the federal cryptocurrency strategic reserve

On Friday, 7th March, at just after 9pm UK time, Donald Trump started his inaugural Crypto Summit at the Whitehouse, Washington DC. Before Trump was elected he made all the right noises about a cryptocurrency reserve, many touting Bitcoin, and others getting extremely excited about Ripple (XRP) with its big price moves counter to many other altcoins in the market.

The crypto utopian's vision is that the moment Trump made his announcement, Bitcoin would immediately surge, the world would return to a harder form of money and government would be accountable to the democratic population. Wars would end. Everyone would love a far more fulfilled life backed by truth and honesty.

The price surge

Anyone that has watched federal reserve's announcements accompanied by a trading view Bitcoin chart, will notice that at some point during the announcement, the price surged and pulled back quickly. It looks a lot like a car pulling away, only for it to slow down and start reversing sharply. Those with recipe money and leverage stood to make a lot of profit.

We were more interested in the data we were collecting, interestingly, we looked back and it appeared to be at around 911 pm that this event happened.

The net result of the Cryptocurrency US strategic reserve on the price of Bitcoin was... A nothing burger. Many will have made a lot of money but, many may lose more by selling what they think is the height of the market.

What was contained within the Crypto Reserve's strategic announcement and is it good for crypto?

• There was no commitment by the US federal government to buy cryptocurrency unless it represented a definite advantage to the citizens of America
• What we have is the formation of a government ledger and thus balance sheet of cryptocurrency assets seized by the government from, let's just call them cybercriminals
• The cryptocurrency lobbyists present at the crypto summit were all major players in the scene. These were not small technology houses or teams with solid products. Instead, these are entities that some may say to be cryptocurrency monopolies that harm the long term prospects of cryptocurrency
• Trump was his usual slightly chaotic self, playing a bit and not saying precisely what the crypto lobbyists were praying for, but on the whole it was fairly positive
• There was significant discussion around innovation, AI, and making the United States the leading nation in cryptocurrency. He, as ever, explained how they had to out-compete China in this quasi arms race that seems to dominate much of the dialectic within the international political arena
• In what was a very quick couple of sentences, trump expressed the importance of stable coins as a strategic reserve asset. Meaning we just have digital tokens as paper dollars. The probability is that there may be a move to make treasury reserves more transparent on the blockchain and this could be a net positive for blockchain such as Ethereum, Tron, Solana, Cardano, and Algorand

What effect has the crypto summit had on our individual cryptocurrency portfolio?

It should be noted that the team behind Crypto Statto have many cryptocurrencies which we have accumulated over years through swing trading. Looking at one of our portfolios we effectively see a drop in the Fiat value of our portfolio. We neither saw trades execute based upon swings between coins. We are not day traders and are accumulators over time. We expected there to be a big fall in the value of our portfolio. We are too busy building the crypto platform to focus on trading all the time. One area of analysis to focus on is that many announcements expected to be good for an asset class turn out to be a "Buy the rumour, sell the news" event.

The key take away from the Crypto Summit

• Anyone with an ear to the ground - no commitment by the US federal government to purchase Bitcoin. Most will have come away feeling highly underwhelmed. Many hoping to get rich will continue to publish constantly in the hope their coins 10000x and retire forever.

Macro thinking with crypto

The only way I see cryptocurrency is two-fold;

• As sound money
• A new financial layer to revolutionise banking

Significantly, we must also understand what cryptocurrency means as a threat to the existing socio-economic world we have largely experienced over the last 200 years.

Debt, Capital, and Inflation

Assets and Depreciation

The most confusing element to money, is understanding that what you earn depreciates the second it is given to you. The first depreciation is taxation, the government will tax you directly for earnings and indirectly through the taxes on goods you purchase will further drain that money. Many will say, "Ahhh well, but salaries increase to offset those increasing costs of living." There are two responses to that. Assuming that salaries to the cost of direct and indirect taxation, salaries most certainly don't increase to cover the increase in the cost of living.

The cost of living is what we can pretty much put down to the cost of everything we buy relative to the cost of everything we earn. A great example is shrinkflation. Shrinkflation is the phenomenon of a retailer charging the same price for an item but putting slightly less in the packet. It is a way to enable to consumer to feel that they are paying the same money for something that they intrinsically feel is not as weighty as they used to obtain. The alternative would be to simply charge the same money for the same volume for more money. On the shrinkflation side, we have my favourite Spanish peppers I used to buy for £1.50 a bag in Sainsbury's. Now the bag feels smaller but they are still £1.50. Am certain there will come a time when I will need two bags. Conversely, a 750ml bottle of wine stays at the same volume and personally have been out of that game for a long time. Of course there are discounts and I personally only buy certain goods when they are massively discounted. It is obvious we cannot accept ever increasing prices versus a salary that cannot meet them.

The bizarre reality is that no matter what we earn and convert into capital, it is the case that we are constantly losing wealth. Assets we thought were a good store of value are now an excuse for the government to add taxation to. Imagine if for example, you had a property in North West London and decided to move to a similar sized property in South East London. The two properties are the same but the costs of doing such an exchange after taxes means you have to find the additional capital.

The push is towards cryptocurrency as that capital is portable, secure, and non-taxable in many circumstances. Just as the government cannot tax you for moving to Switzerland with your belongings, in many jurisdictions they cannot charge you for taking your cryptocurrency cross border.

We find ourselves with the grim reality that nothing is off the table for the government. The most scandalous element of this is the vast amount of energy people put into their personal efforts to stabilise their existence that the government can put on a balance sheet. If one decided to buy gold and store it in a secure storage facility there will be a small storage fee applied each year, the company storing the gold in those vaults will potentially lend out that gold as paper marked to market and will report this to the regulator which means the government has a notable asset on its balance sheet. The government can use this as collateral to give itself a higher bond rating When issuing government debt. It is a lot more complicated than that but in theory assets that one worked for and pay tax on, by one's own prudence track inflation and end up being value that the government can use to issue more debt.

Debt, assets and inflation

Many will not realise that the fractional reserve banking system is creating money out of thin air. The archetypal best example is where a person buys a house with a mortgage. A mortgage is created by a mortgage lender given the right to issue debt in exchange for taking ownership of a property. The minute the mortgage has completed see property is not your assets but your liability and thus the asset of the lender. That asset it then allows the mortgage lender to issue more debt for other home buyers. Lenders can charge an interest rate to the buyer which ends up being An income for the lender, thus further revenue that can be put into other assets on balance sheet for the lender allowing them to issue more debt to more borrowers.

Many will say "Property always goes up in value" but unless you happen to be in the right period, it is questionable whether price inflation plus repayment principal is higher than the realised asset gain of the property. Many countries now tax capital gains on properties charge stamp duty and apply inheritance tax. Countries also impose property taxes which can be a huge percentage of the property's actual value. So-called "safe assets" that "only go up in value" are anything but that if you break down the numbers.

As you start to navigate the many different types of assets the cost of owning these assets through their lifetime and at the point of sale we have to ask whether many of these assets are worth owning at all.

Cryptocurrency as digital assets

We now find ourselves with a new asset class quite unlike any other in that it is decentralised and accessible cross borders. You could be living in Spain, visit Colombia and start up with your own Bank of digital assets not needing a third party to access and use these digital assets. A great benefit is that in theory you could move to another country pay people in cryptocurrency earn in cryptocurrency and then move to another country doing the same. This is the proposed tangible benefits if we weren't dealing with the complexity of government regulations on cryptocurrency And commerce in general.

Is cryptocurrency an inflationary asset?

If we think about cryptocurrency it is touted as a non-inflationary asset. A huge amount of Bitcoin will never be seen again. The amount produced per block reduces with every halfing and at some point no more Bitcoin will be produced. It is the ultimate form of hard money, unable to be created by Fiat. We do have more ETF's with Bitcoin as their underlying. We therefore have rehypothecation as a feature built into the Bitcoin financial subsystem. It is also possible to Lend out cryptocurrency in exchange for income. Indeed this is a better way to avoid capital gains on your cryptocurrency in many jurisdictions. This is not financial advice and we are yet to confidently put own personal cryptocurrency stack into these types of platforms. In our opinion the counterparty risk is too high. Please do your own research.

When we consider that the number of blockchains, cryptocurrencies, and tokens are increasing we have to conclude that cryptocurrency is another inflationary asset. Bitcoin is not an inflationary asset but with the many features built on top of the Bitcoin layer there is undoubtedly a huge problem with regards to Inflation of Bitcoin.

Cryptocurrency as another taxable asset - money

Many will say that we are already in this position whereby you can offer services and goods in cryptocurrency to get paid in cryptocurrency, to then pay taxes but retain cryptocurrency as your personal strategic crypto currency reserve. The benefit to this is that you will have a reserve of assets to be expected to increase in value significantly over time. Indeed Michael Saylor and others have presented the capital gain in net asset value compared to say the S&P 500. The big problem with cryptocurrency as a store of value is the huge volatility in the price. Imagine you sell goods in cryptocurrency and decide to hold that cryptocurrency for the taxable year, at the end of the year you could have less cryptocurrency value to meet your taxes if there was a huge pull in the value of your cryptocurrency asset. Of course you would be reporting a loss and not having to pay any taxes but in-theory, for many businesses cryptocurrency is not a viable means of maximising profits when the market is falling.

The dilemma for governments and organisations is that cryptocurrency is not a stable enough assets to do business and generate revenue through taxes and profits.

Strategic reserves of cryptocurrency by listed companies

Companies are using cheap government debt to buy cryptocurrency to hold on their balance sheet. The benefit to them is that they are using depreciating Fiat money to buy an appreciating future form of money. Unrealised capital gains then allows the company to borrow more using these as collateral. Funds and other large financial institutions can buy the shares of these companies thereby having exposure to cryptocurrency. Clever financial management can allow companies to create loss events and reduce their taxes - For example if Bitcoin dropped significantly they could just sell some at a loss to reduce profits for that year.

Individuals on the other hand do not have such an advantage. Individuals without trading knowledge are encouraged to dollar cost average into cryptocurrency using their own income. There is no shortage of influencers within the cryptocurrency space encouraging people to "Buy the dip". This can be disastrous for many.

Others are encouraged to trade the market which for most is also a disastrous affair.

Other crypto assets offer staking - effectively interest bearing assets which gives them interest on their holding/stake of an asset. ADA (Cardano) offers a staking rate of 2.55%. Its inflation rate is 2.5%. At today's price of $0.77c, on $10000 purchase of Cardano, that's $255. It is highly likely many will have purchased Cardano above today's price, it is highly likely that Cardano is going to fall in price looking at the chart. We have to wonder if the price of Cardano is ever going to get anywhere near it's all time high.

The upside is that having your own personal strategic reserve in many cryptocurrencies is a disastrous move. This is really the case if you dollar cost average into cryptocurrency. We are saying this as a cryptocurrency analytics platform.

The real significance of cryptocurrency for the average retail investor

It represents a really poor choice for investing. This is our opinion. Staking coins is a complete waste of time. Lending out cryptocurrency is a high risk strategy. Any attempts to accumulate crypto through currency runs the risk of taxation in many jurisdictions but there are some silver-linings.

Silver Linings for the retail cryptocurrency investor and small businesses

• Swing trading with cryptocurrency to accumulate more cryptocurrency during market downturns with the expectation of significant upside in cryptocurrency value
• Dedicating your time to full time day trading
• Accepting cryptocurrency for digital services and content online
• Building tools and services with blockchain backed technology where appropriate
• Holding cryptocurrency there's no cost to the holder aside from software and hardware - you get taxed for owning a property, you don't get taxed but holding between
• Proof of ownership - if you hold your private keys there is no doubt that you are the owner of the cryptocurrency assets

Recap so far on our article

• We explored the inaugural crypto summit held by trump in conjunction with cryptocurrency lobbyists at the White House
• We established that it was largely a nothing burger, indeed the market has fallen quite significantly since this event
• There is huge complexity around cryptocurrency as a means of accumulating wealth and it is our opinion that many well covered mechanisms for accumulating crypto may end up with people losing money
• We exposed the many myths around inflation, debt and ownership of assets
• Will you available to the huge advantages large corporations have in comparison to retail investors
• We explain the benefits of owning cryptocurrency and our proposal is for swing trading during lower price periods in the cryptocurrency life cycle, with the expectation of upside in the future

Gold as the proxy on how cryptocurrency could turn out

We know that a lot of ground has been covered in this article and we appreciate your patience in reaching this point but all of the previous items are minuscule into the significance of looking at gold.

Gold has been described as "God's money", fiat as "Government money", and cryptocurrency as "Peoples money". Gold has been used for thousands of years as a;

• Store of value
• Medium of exchange
• Unit of account

Gold does have an inflating supply and is theoretically the best form of money to ever exist. The key question we have to ask is who owns all the gold? The answer is - the government. Government holds gold directly and indirectly. Gold is a Basel Tier 1 capital asset, and thus companies benefit by declaring their holdings in gold. Notably individuals will have to pay capital gains on different versions of gold two governments in some jurisdictions despite it being classed as cash for regulatory purposes.

A really important perspective that I have not seen alluded to is this proposed audit of gold within Fort Knox. This has been the subject of debate for decades as to whether the amount of gold held within Fort Knox is what has been declared by successive US governments. Trump has recently said of his intention to fully audit the gold within the Fort Knox secure facility. Asking Grok their estimate on how long it will take to audit Fort Knox assuming that the gold is there - a year. If we then ask the question, that has not been asked, what about all the gold held by other governments?

Why would we store vast amounts of gold that are not going to be moved around or exchanged for other goods and services? The fairy tale idea is that one country becomes economically prosperous and buys goals for a rainy day to buy goods and services from other countries through their prosperity.

The more astute will say that gold is collateral allowing governments to issue more debt. The question here is - would you lend somebody $1000 because they showed you a $10 note?

Analysis of Growth (Source Grok)

Money Supply vs. Gold Reserves

• M2 grew 34x, while gold’s market value grew 59.4x, but physical gold reserves shrank. The M2-to-gold ratio dropped from 56.7 to 32.4, meaning money supply has grown slower than gold’s price appreciation. This reflects gold’s role as an inflation hedge post-1971, outpacing fiat money creation in value terms, though not in volume.

• If we used 1970’s physical gold (9,751 tons) at today’s price ($2,500/oz), it’d be ~$783 billion, lowering the 2025 ratio to ~27—still a decline from 56.7, showing money supply expansion hasn’t kept pace with gold’s revaluation potential.

Debt vs. Gold Reserves:

• Debt grew 102.7x, far outstripping gold’s 59.4x value increase. The debt-to-gold ratio rose from 33.6 to 58.1, indicating debt has ballooned relative to gold reserves. In 1970, gold could “cover” 3% of debt ($11B/$370B); now, it’s ~1.7% ($653.75B/$38T)—a stark decline in gold’s backing power.
• Real figures are $11 billion gold vs. $653.75 billion, and $370 billion debt vs. $38 trillion. Scaling your example to reality, debt growth vastly exceeds gold’s, consistent with fiat system dynamics.

Gold bugs and silver bugs

This is a subject in itself we could explore forever. Main assertions are;

• The government is bankrupt
• Governments hold vast reserves of gold
• There will have to be a currency revaluation with a return to sound money
• Everybody that owns gold and silver will be fantastically rich
• Keep buying gold and silver
• Truth and honour will prevail within society, government, and money

Does this not sound like the exact precise same advice given to those within the cryptocurrency space.

Could cryptocurrency become gold?

There is this never ending debate on whether gold or cryptocurrency is a sounder form of money. The one inevitable outcome for gold the vast majority of it just ends up being stored in a room. A very large amount of cryptocurrency is ending up on the balance sheets of major institutions, there are stores of cryptocurrency on government balance sheets, and is getting harder to free exchange cryptocurrency for much of retail.

Is their value in cryptocurrency replacing many of the layers within the financial services industry?

We see it that cryptocurrency can provide layers for the traditional financial industry to work off of rather than displacing the financial industry. Decentralised applications will offer far more flexibility for society. Many will say well with gold you can use it as jewellery and within electronics but cryptocurrency does offer the possibility to completely revolutionise all manner of businesses. This is the one reason why we believe platforms such as Crypto Statto may help you to accumulate more cryptocurrency. We do see the value in many cryptocurrencies increasing significantly, events such as Trump's cryptocurrency summit are driving attention to the space.

Conclusions on the significance of the cryptocurrency in conjunction with other market phenomena and announcements

The cryptocurrency summit is the perfect example off when "hype meets reality". Much cryptocurrency related media and influencers post hyperbole about how XRP is going to $589, or that Bitcoin will be $1,000,000 next year. Current ones includes people saying this coin will be this much next month write it down. Others say I'm buying more of this coin great. One recent one of absolute stupidity was an account that said they had lost $50,000 trading crypto but told their wife they lost $70,000 so that they have $20,000 to play with.

It is no different to the financial doom podcasts "Any day now it's all going to collapse, hold onto your gold and silver". There's absolutely no point drinking can't stand it

We have to keep accumulating cryptocurrency as cheaply as possible in the face of the many advantages that large institutions and governments have to control the market. We must look at historical parallels when trying to understand how cryptocurrency could end up. We need to keep a keen eye on the United states to see how cryptocurrency becomes more of an important part of their infrastructure, and as to whether or not the democratisation of financial services can come to fruition.

It will be of keen interest to see how other governments respond to this and whether we see technical innovation within many countries now that "the gloves are off".

We have a slightly different perspective to most retail investors within the cryptocurrency space because we are focused on building tools and services but are keen to see our value increase. The key lesson we learned is to not buy into the hype and to keep plugging away.

Evading us is the ability to create metrics that confirms "gut feel". I sat there watching the crypto summit I knew there would be a slight rise in the price before a slow decline in the value of most coins but despite all of that we haven't taken much off the table.

The lesson is that until you have the right mechanisms to dissect the market, you are largely going to be unable to take advantage of it. This is where those with a keener eye on the market should aim to be.

If you wish to find out more about our platform there are many pages on here and we advise joining up for free, we give free credits for access to our reports and API, and have much more plans for this platform.