Creating a national Bitcoin reserve carries serious implications for both the cryptocurrency and traditional financial markets.
Haider Rafique, global managing partner for government and investor relations at crypto exchange OKX, cautions that such a strategy could destabilize BTC prices and signal weakness in the US dollar.
Potential price manipulation risks
While advocates suggest a national reserve could elevate Bitcoin to a global monetary standard, critics see substantial risks if governments hold large quantities of the asset.
Rafique explains that government control over significant portions of Bitcoin could lead to price manipulation.
Selling large reserves could flood the market, undermining the decentralized principles that define Bitcoin.
“Administrative policies can change quickly. A strategy that seems advantageous today might be reversed by a future administration,” he told Cointelegraph.
Broader Implications for the US Dollar
The effects would extend beyond digital assets.
Establishing a national Bitcoin reserve could weaken confidence in the US dollar.
Rafique warns that investors might move toward traditional safe-haven assets such as gold or the Swiss franc, seeking stability. The resulting shift could trigger sell-offs in equities and other risk-on investments, creating a cascade of liquidations across financial markets.
The combination of crypto and traditional market pressures could intensify volatility and economic uncertainty.
National Reserves vs. Decentralization
Supporters of national Bitcoin holdings argue that a reserve could modernize monetary policy and reduce dependence on fiat currencies.
They envision a future where Bitcoin functions as a global standard, providing an alternative to central bank-issued money.
However, critics emphasize that concentrating large amounts of Bitcoin in government hands contradicts the decentralized ethos that underpins the cryptocurrency.
Centralized holdings could expose markets to manipulation, undermine trust, and erode confidence in digital assets as neutral stores of value.
Historical context and market lessons
Past events show the risks inherent in central Bitcoin holdings.
The German government’s sale of 50,000 BTC in 2024 illustrates how government actions can keep prices suppressed and create instability in crypto markets.
El Salvador, the first country to adopt Bitcoin as legal tender, has also had to grapple with the challenges of managing a large national reserve. In 2025, the government split its $680 million Bitcoin holdings across 14 wallets, each capped at 500 BTC, to reduce security risks linked to quantum computing threats.
Another significant example was, December 2024, when a wallet tied to the U.S. government transferred about 19,800 BTC, roughly $1.9 billion into a Coinbase Prime address.
Even without full sales, governments controlling large BTC volumes can affect sentiment, volatility, and market trajectory.
Analysts note that the liquidity of Bitcoin can fluctuate dramatically, and concentrated reserves amplify market exposure. Policymakers considering national reserves must weigh potential benefits against historical evidence and volatility risk.
Balancing innovation and stability
While national-level adoption could provide new monetary tools, it also introduces uncertainty.
As Bitcoin continues to gain institutional attention and adoption grows, understanding the potential consequences of large-scale reserves becomes critical to protecting crypto markets and the broader financial ecosystem.
Oleksii Shumak
Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource, and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice. HODL FM strongly recommends contacting a qualified industry professional.
