Could Cryptocurrency Strategic Reserves Be Bad for Growth?

In March 2025, an executive order was signed in the US to introduce a cryptocurrency strategic reserve. Believed to be a sign of further institutional adoption and a move that would instigate price rises, could these reserves actually be bad for growth?

Cryptocurrency strategic reserves have been much lauded over the past 12 months. From US state and federal initiatives to corporate adoption, it seems everyone is getting in on the act. Yet as this happens, Bitcoin and other cryptocurrencies move further away from their initial purpose: To provide a digital payment method for everyday goods and services, free from the influence of major financial bodies. So could strategic reserves be bad for growth?

Cryptocurrency Volatility Returns

September 2025 has been tumultuous for Bitcoin and other cryptocurrency prices. Bitcoin itself was at $117,656 on Thursday, the 18th. It then tumbled along with the cryptomarket, mainly due to a Fed rate cut that did little to inspire confidence. This took it to $109,653 on Friday, the 26th, before a short rise to $112,281. Ethereum has had similar volatility, peaking at $4715 on Saturday, the 13th of September, then dropping to $3,873 by Friday, the 26th.

In its weekly market updates, crypto exchange Binance noted how, in the same week, the state of Michigan passed a bill allowing up to 10% of state funds to be held in Bitcoin and crypto. The assets will serve as a long-term strategic reserve, aligning with moves by states like Texas and New Hampshire. But with so many states, countries, and companies adopting reserves, why are prices tumbling?

How Strategic Reserves Could Impact Bitcoin Prices

Some voices have expressed trepidations about the wholesale adoption of Bitcoin and other cryptocurrencies into reserves.

Haider Rafique is one of those who commented in a recent interview about this, with the main worry being the possibility of price manipulation. He added that any government holding large stocks could shape the market by releasing assets. The point was that this would undermine the fundamental role of cryptocurrency as neutral, decentralized money.

An incident has already occurred in which the government’s selling of cryptocurrency has resulted in prices being kept low. In 2024, Germany sold off 50,000 BTC. These had been seized in an anti-piracy operation, and the country managed to make $3.13 billion from the sale. Many believed this was a bad economic move, and if Germany had held the fund today, it would be worth $6.64 billion. Regardless, they sold, and many believe that this pushed the price of Bitcoin down and kept it below the $60,000 mark.

There is also a theory, prompted by the same investor, that could be a signal of what is already taking place, more than an omen of things to come.  He believes this reserve would show that the major global currency has weakened. This would cause people to run for safe havens such as gold. It would also see a liquidation of riskier assets.

Binance’s monthly market insights give an indicator of the possibility of this happening right now. It noted that in August, the total crypto market cap fell 1.7% after a hot PPI report. This is a measure of sales received by domestic producers for their output. They then added that September may bring further weakness as investors take profits, suggesting that further big sell-offs are on the way.

The Positive Case for Strategic Reserves

While all of this makes sense and is echoed in current cryptocurrency climates, it may not all be backed up by evidence. In the last year, prices of cryptocurrencies, particularly Bitcoin, have generally risen steadily. In the case of Bitcoin and Ethereum, they have also begun to lose volatility. All of this has taken place as large companies gobble up the supply of Bitcoin, making it scarcer on the markets.

It is also worth noting that these price rises have been taking place without the US reserve being in place. While the order has been signed, there have been delays in the accounting process to see how much cryptocurrency is actually being held. A report was due in April, but the sheer scale of this seems to have put it back.

There is also a range of altcoins that are doing exceptionally well throughout this climate. Binance noted that BNB surged over 10% last week, becoming the second-best performing large-cap YTD, overtaking ETH. Growth in BNB Chain activity, token burns, and exchange-driven demand have strengthened its fundamentals, while treasury inflows highlight growing institutional interest beyond BTC. These are rarely spoken about in relation to reserves, signifying that the impact on altcoin prices is minimal.

Cryptocurrency strategic reserves are still in their infancy. While companies and countries may be racing to adopt them now, the true impact may only be felt years down the line. The main worry is that they could weaken global currencies. If this does happen, then Bitcoin would only become more valuable.