3 Important Things to Know About the Strategic Bitcoin Reserve Fund

President Trump has fulfilled a promise made during his popular campaign this month. After laying the groundwork for a strategic reserve fund holding cryptocurrency in previous commitments, signing Executive Order 14233 on March 6 aims to establish an official strategic Bitcoin Reserve Fund and a separate digital asset reserve. Many cryptocurrency investors have hoped for a truly game-changing strategic reserve, paving the way for the purchase of Bitcoin (CRYPTO: BTC) and other digital assets of the federal government. The executive order did not really meet those optimistic hopes and the market's immediate reaction was largely negative. On the other hand, this two-pronged digital asset strategy may ultimately have some power to drive value. Here are three important details about Executive Order 14233 that you may not have noticed when reading the title -- and perhaps even overlooked after quickly viewing the order. Bitcoin investors should pay more attention than others, but this is also important news for those holding Ethereum (CRYPTO: ETH) and XRP (CRYPTO: XRP).

1. Private investment overshadows strategic reserves The idea of reflecting the gold reserves of the United States in Bitcoin ( and perhaps other digital assets ) sounds like a big issue. However, the amount of gold held at Fort Knox and elsewhere is not that large. According to data from the Treasury Department, the total value of all gold owned by the federal government is about 11 billion dollars as of February. To better understand this golden number, there are currently three exchange-traded funds (ETF) based on Bitcoin with over 11 billion dollars worth of Bitcoin in each portfolio:

Gold reserves would be larger if the US dollar were directly based on the value of gold held, but the dollar no longer operates that way. The country began to cut the gold standard in 1933, completing the journey to fiat currency in 1973. Since then, the dollar has not been tied to any physical assets, becoming a fiat currency with more direct government control over its actual value. Therefore, gold reserves have nothing to do with the value of the US dollar. According to some sources, this is also a relatively small part of the global gold reserves, currently valued at around 20 trillion dollars. ETFs are currently managing 5.5% of the market value of cryptocurrencies, making 11 billion dollars a drop in the ocean of gold. In other words, it may be a mistake to expect price-changing impacts from any version of the Bitcoin Strategy Reserve. These reserves are not that large. Private investments flowing through the ETF seem to have a stronger impact on the price of Bitcoin compared to any government efforts. 2. The digital asset reserve is very different from the strategic Bitcoin reserve. Cryptocurrencies that are not called Bitcoin fall within the scope of a separate digital asset reserve. This investment portfolio is tasked with collecting cryptocurrencies other than Bitcoin that are currently held by any department of the Treasury, only adding to it when there are results from legal proceedings. To be clear, the Treasury will manage its altcoins in a central investment portfolio but will not actively purchase any more Ethereum, Litecoin (CRYPTO: LTC), XRP, Solana, or any stablecoins. Any additional contributions to this reserve will come from criminal or civil cases. Investors in Solana and XRP are hoping for a more aggressive buyback program, and the price of their coins has dropped sharply right after Trump signed the executive order.

3. The purchase of Bitcoin "budget-neutral" may be larger than you think. I do not have any optimistic detailed information to share about the Digital Asset Stockpile, but the Strategic Bitcoin Reserve may have some price-driving power in the end. If Bitcoin continues to increase in value in the long term, the Treasury may reallocates many forms of currency holdings to this novel asset. Selling some gold is also an option, although I've talked about the limited size of that resource. The Ministry of Finance also has about $24.1 billion in euros and securities priced in euros, along with $13.7 billion in similar assets measured in Japanese yen. In total, that's about $36.8 billion in foreign currency reserves that could be transferred into the Bitcoin pool.It also manages $27.2 billion in reserves at the International Monetary Fund (IMF), not to mention the $170.7 billion in special drawing rights (SDR) the IMF's basket of major international currencies. These baskets are similar to savings accounts on a global financial scale You may have heard of other types of asset reserves, but they are often beyond the control of the Ministry of Finance and therefore are not a serious part of the discussion about strategic Bitcoin reserves. The Energy Department has about 396 million barrels of oil in the Strategic Petroleum Reserve as of March 14. Its value is approximately 27 billion dollars based on recent oil prices, but it is not an asset owned by the Treasury Department. Similarly, 1.4 billion pounds of surplus cheese in long-term cold storage could be worth 7.8 billion dollars in the open market. Flooding the market with a large amount of supplemental oil or cheese will literally drive prices down very low, but you understand what I mean. The U.S. Department of Agriculture (USDA) owns the cheese stocks, and the USDA is not mentioned in Executive Order 14233. And withdrawing a large amount of U.S. monetary reserves from the IMF could lead to a global economic crisis, even if the Treasury is moving money into a new promising digital asset like Bitcoin.

Therefore, any Bitcoin purchase program on a market scale must be carried out very carefully over a long period, and I do not expect any major price increases overnight. However, there are some possibilities for a slow price increase here -- even if using national oil and cheese reserves is not an option.