Governments Holding Bitcoin Could Destabilize Markets
Establishing a national Bitcoin (BTC $110,767) reserve could have damaging consequences for both BTC and the US dollar, according to Haider Rafique, global managing partner for government and investor relations at crypto exchange OKX.
Rafique told Cointelegraph that government-held BTC reserves could allow administrations to manipulate markets. A sudden sell-off could undermine Bitcoin’s role as decentralized, neutral money.
He questioned the long-term stability of such a policy:
“What happens in a few years if a new administration decides this was a bad idea?” Rafique said, stressing that political shifts could pose a liquidation risk.
In 2024, the German government provided a cautionary example when it sold 50,000 BTC, keeping market prices suppressed below $60,000.
Risks to the US Dollar and Global Finance
Beyond Bitcoin markets, Rafique warned that establishing a BTC reserve could trigger a broader financial crisis.
“The most significant macroeconomic implication would be a loss of confidence in the dollar,” he said. A US Bitcoin reserve would signal that the dollar is weakening, pushing investors toward safe-haven assets like gold or the Swiss franc.
This shift could spark cascading liquidations across risk-on markets, leading to a global financial shock. Rafique concluded that a Bitcoin strategic reserve may unintentionally destabilize both the cryptocurrency sector and traditional finance.
