U.S. Strategic Crypto Reserve Faces Low Approval Odds, JPMorgan Says
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JPMorgan analysts believe the chances of the U.S. approving a strategic cryptocurrency reserve are less than 50%. According to Nikolaos Panigirtzoglou, a managing director at JPMorgan, getting congressional approval would be difficult, making such a plan unlikely.
Even if the government were to approve a crypto reserve, it would likely only include Bitcoin (BTC) and Ethereum (ETH). JPMorgan argues that adding smaller tokens like XRP, Solana (SOL), and Cardano (ADA) would raise concerns about risk and volatility. This view comes after markets initially reacted positively to former President Donald Trump’s suggestion to include those tokens. However, skepticism quickly grew over whether Congress would approve such a move.
Global Trends Show Governments Rejecting Crypto Reserves
JPMorgan’s report also highlighted that similar proposals have failed at the state level. To this end, efforts to establish BTC reserves in Montana, North Dakota, South Dakota, and Wyoming have been rejected due to concerns about risk and instability.
This hesitation extends beyond the U.S. Globally, central banks have also shown reluctance to accept cryptocurrency as a reserve asset. As it is Switzerland’s central bank and Poland’s central bank have rejected Bitcoin reserves, while Singapore has stated that cryptocurrencies do not fit its long-term investment strategy. Additionally, the European Central Bank has criticized the idea of holding Bitcoin reserve. These among others reflect broader doubts among policymakers worldwide.
Crypto Market Faces Pressure Amid Negative Trends
Doubt over the U.S. adopting a crypto reserve is just one of several factors affecting the market. February saw Bitcoin prices drop by nearly 20%, alongside $3.5 billion in outflows from Bitcoin ETFs—the highest monthly outflow since they launched. JPMorgan analysts believe both retail and institutional investors are reducing their crypto holdings, while momentum traders are increasing short bets, adding to market pressure.
Capital markets are also showing signs of caution. Strategy (formerly MicroStrategy) recently issued $2 billion in convertible debt, but analysts worry that investor demand weakens. With Strategy’s stock down 40% from its peak in November and crypto miners borrowing heavily, new fundraising efforts could face difficulties. Without positive developments, JPMorgan expects the crypto market to remain under pressure soon.
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