What Trump’s bitcoin binge really says to Americans about their money

With the signing of Executive Order 14233 in March 2025 to establish America’s first Strategic Bitcoin Reserve, President Donald Trump didn’t just make policy history — he potentially changed the investment landscape for millions of Americans. For the first time, the U.S. government is officially treating bitcoin BTCUSD as a national reserve asset, alongside gold GC00 and other strategic holdings in the federal vault.

But what does this unprecedented move mean for your portfolio, your retirement savings and your financial future?

The most immediate effect for investors is bitcoin’s newfound legitimacy. When the executive order was announced, bitcoin was trading above $90,000 — partly fueled by anticipation of this exact policy. As of August, the U.S. government holds almost 200,000 bitcoin worth roughly $24 billion, making it potentially the world’s largest sovereign bitcoin holder.

This official endorsement matters for several reasons. First, it signaled to institutional investors that bitcoin is no longer just a speculative asset. The Trump administration called bitcoin “digital gold,” due to its fixed supply of 21 million coins and hack-resistant security record.

For individual investors, this validation could mean several things: increased corporate adoption as companies follow the government’s lead; potential regulatory clarity that makes cryptocurrency investments less risky from a compliance standpoint and growing acceptance of bitcoin in traditional financial products, including 401(k) plans and IRAs.

Perhaps more significant for most Americans is what the bitcoin reserve reveals about the U.S. dollar’s DX00 prospects. The timing isn’t coincidental – in 2025, the U.S. dollar index DXY suffered its worst first-half performance in more than 50 years. When your own government starts diversifying into bitcoin, it raises questions about confidence in the dollar’s long-term strength.

This matters enormously for your investments. Most Americans hold the majority of their wealth in dollar-denominated assets: bank accounts, bonds, money-market funds and stocks. While the dollar’s reserve-currency status remains intact, its share of global reserves fell to about 58% in the first quarter of 2025, from 71% in 2000, as central banks diversified into gold and other assets.

For your portfolio, this suggests several potential strategies. International diversification becomes more attractive when your home currency is under pressure. Foreign stocks, international bonds and commodities could provide a hedge if dollar weakness continues. Real assets such as real-estate investment trusts (REITs) and commodity-focused funds historically perform better during currency debasement periods.

The most obvious question for investors is whether to have bitcoin exposure now that the Trump administration has blessed the cryptocurrency. The argument for bitcoin investment has several components. Scarcity economics favor bitcoin in the long term — with only 21 million coins ever to be created and millions already in circulation, supply constraints could drive prices higher as adoption grows. The government’s policy removes a major overhang risk (regulatory crackdown) that has historically suppressed bitcoin prices.

Corporate adoption is accelerating, and federal endorsement could encourage more corporate treasury allocation. If large companies start following the government’s example, demand could significantly outstrip the limited supply.

The risks, however, remain substantial. Bitcoin’s volatility is extreme compared with traditional assets. Even crypto-industry advocates acknowledge that “bitcoin would plunge roughly 70% to 80% from its record high” in previous cycles, with current optimistic projections still expecting “corrections in the range of 30% to 50%.”

For most investors, the prudent approach is measured exposure. Financial advisers generally recommend limiting cryptocurrency to 1%-5% of total portfolio allocation due to volatility risks.

Read: ‘I am highly alarmed by the proposed changes to retirement accounts’: I don’t want bitcoin or private equity in my 401(k). What can I do?

One of the most compelling arguments for the bitcoin reserve is its potential as an inflation hedge.  With the U.S. money supply (M2) reaching record highs, fears of currency debasement are driving investor interest in alternatives to cash.

Bitcoin proponents argue that its fixed supply makes it immune to the monetary printing that erodes traditional currencies. Unlike fiat money, which central banks can create at will, bitcoin’s algorithmic scarcity theoretically protects against inflation. The U.S. government’s decision to hold bitcoin suggests official acknowledgment of these inflationary risks.

However, bitcoin’s track record as an inflation hedge is mixed. During recent inflationary periods, bitcoin has at times moved with risky assets rather than providing the stable purchasing power preservation that gold traditionally offers. Its correlation with stock markets during stress periods suggests it may not provide the portfolio protection that traditional inflation hedges deliver.

For investors seeking inflation protection, a diversified approach makes sense. This might include some bitcoin exposure alongside proven inflation hedges such as Treasury inflation-protected securities (TIPS), real estate, commodities and international assets.

More: This crypto investor correctly predicted bitcoin would hit $120K in 2025. He now expects it to double in the next year.

Critics raise valid concerns about the bitcoin reserve that investors must consider. Prominent economists remain skeptical about federal cryptocurrency reserves, viewing them as speculative rather than prudent fiscal policy. The security risks are real — concentrating billions of dollars in digital assets creates attractive targets for hackers and nation-state attacks.

Political risk is another factor. The bitcoin-reserve policy could be reversed by future U.S. administrations, potentially creating market volatility. If the government ever needs to sell its bitcoin holdings during a crisis, the market impact could be severe given the relatively small size of cryptocurrency markets compared with traditional assets.

For individual investors, these risks suggest maintaining portfolio balance and avoiding overconcentration in any single asset class, including bitcoin. Proper risk management means sizing positions appropriately and maintaining adequate traditional asset allocation even while exploring cryptocurrency opportunities.

The Strategic Bitcoin Reserve represents a historic shift in how the U.S. government views cryptocurrency, with significant implications for all investors. The policy provides unprecedented legitimacy to bitcoin while raising questions about the long-term strength of the dollar.

This means that a modest bitcoin allocation may now be justified given government endorsement; international diversification could be more important amid dollar weakness; inflation protection strategies deserve renewed attention; and traditional assumptions about currency stability may need updating.

For investors, the message is clear: The financial landscape is shifting, and portfolio strategies may need to evolve accordingly. Whether bitcoin proves to be digital gold or digital fool’s gold, the U.S. government has made a significant bet — and understanding the implications is crucial for your financial future.

More: Are your parents afraid of investing in crypto? How to talk with them so they’ll actually listen.

Plus: One reason NBA star Kevin Durant is holding onto his bitcoin: He can’t get into his Coinbase account