Pennsylvania's Bold Move: Could a U.S. Bitcoin Reserve Become Reality?

Next year, Donald Trump’s presidency is expected to bring a number of changes to many aspects of U.S. affairs, including a warmed up sentiment toward bitcoin (BTC). On the world’s largest prediction platform Polymarket, the odds of Trump creating a Strategic Bitcoin Reserve during his first 100 days in office have jumped from 22% on November 10 to 38% at the time of writing.

The increase came shortly after the introduction of the Pennsylvania Bitcoin Strategic Reserve Act last week. The Satoshi Action Fund advocacy group — which is behind the new strategic reserve initiative — has shared that it’s also speaking with 10 other states about similar legislation.

If passed into law, both bills would have significant ramifications for bitcoin markets. Namely, Pennsylvania’s Strategic Reserve bill aims to allow the state to invest up to 10% of certain funds, including the General Fund, the Rainy Day Fund, and the State Investment Fund, into bitcoin. These funds manage approximately $51 billion in assets combined, so an allocation of 10% would represent an estimated $5.1 billion investment in bitcoin.

Similarly, the BITCOIN Act, introduced by Senator Cynthia Lummis, proposes that the U.S. creates a Strategic Bitcoin Reserve built by purchasing bitcoin as well as keeping the BTC that have been seized by U.S. authorities. The BITCOIN Act calls for annual purchases of up to 200,000 BTC for five years, totaling 1,000,000 BTC.

At current prices, this means that if the bill passes, approximately $6.4 billion worth of bitcoin will no longer hit the market, alongside an additional $18.2 billion bid every 12 months for five years. This creates a potential for $23.3 billion worth of bitcoin being purchased in the open market.

To put this in perspective, the combined bitcoin amount to be purchased between the two bills would be approximately 256,000 BTC, which is nearly an entire month’s worth of bitcoin trading volume at Coinbase, the largest U.S. crypto exchange.

Introducing purchase orders of this magnitude would significantly impact supply and demand dynamics, and ultimately — the price of bitcoin. More buy-side demand would exert upward pressure on prices, while reduced sell-side supply would further enhance price stability. The approval of either bill would also prompt major discussions among the largest asset managers globally regarding bitcoin allocations.

Now that the election has passed, all eyes are on whether or not Trump will follow through with his bitcoin promises, with the Strategic Reserve likely being at the heart of most bitcoin-related conversations for months to come.