Digital Fort Knox: The White House's plot to lock up 190,000 bitcoins

“We don’t sell these bitcoins” – it’s never cryptocurrencies that are really being sold, it’s the next fifty years of X-dollar hegemony.

Written by: Daii

While the global crypto community waited with bated breath for the White House summit to release positive signals, an executive order on the evening of March 6, Washington time, caused Bitcoin to evaporate 3.5% of its market value in 24 hours.

The Trump administration has made a high-profile announcement that it will mothball 198,109 bitcoins (about $17.8 billion at current market prices) in a strategic reserve called “Digital Fort Knox” – a name that directly refers to the ultimate vault of U.S. gold reserves, suggesting that bitcoin will become the “digital gold” that underpins the dollar’s credit. However, the cold reality of the market voting with its feet is in stark contrast to the White House’s proclaimed vision of “digital gold”:

Locked $17.8 billion in Bitcoin, causing the market cap to shrink by more than $6 billion.

The market is dull and fragile and has been waiting for good news. However, when the good news suddenly came, the market still felt that it was not good enough, and it fell instead of rising. No matter how bastard the Trump administration is when it comes to Ukraine, but in the case of Bitcoin, this time it is clear that Trump has been let down.

!

The disappointment in the market is mainly due to the disappointment of expectations for the government’s large-scale purchase of bitcoin. Many investors, especially new participants in the cryptocurrency market, may wonder why the market seems to be “not buying” such a high-profile announcement of the US government’s “strategic reserve” of holding bitcoin. Is this just a policy show of “thunder and rain”?

Definitely. The market’s underestimation of this move is not accidental, but the result of a combination of cognitive biases and information asymmetry.

To put it simply, the short-sightedness of the market and the lack of understanding of professional tools have combined to cause Bitcoin to shrink by 6 billion this time.

In fact, both strategically and tactically, the executive order to build a strategic bitcoin reserve is an event that will go down in history, definitely more than the president and his wife “disregarding” meme coins. To put it more academically, this is a very important “institutional placeholder”. That’s what I want to tell you today.

Below, let’s talk about them one by one.

1. Short-term market illusions

In financial markets, especially in highly volatile markets such as Bitcoin, short-term trading and speculation tend to dominate. Investors pay more attention to short-term price rises and falls, as well as “hot spots” that can make quick profits.

For example, a Bitcoin ETF has a 56% share held by hedge funds and is sold off when the arbitrage strategy is no longer profitable. There is also a reason for the recent Bitcoin crash. If you’re interested in this, I recommend taking a look at Bitcoin Falls Below 90,000 Because Smart Money Is Fleeing? 》。

So, when the U.S. government announced the creation of a strategic Bitcoin reserve, the market expected an immediate spike in the price of Bitcoin. However, as the policy statement did not mention the plan to buy more bitcoin now, short-term traders did not see an immediate “positive” stimulus, so the market enthusiasm was not ignited.

The market is like a moth staring at candlelight, attracted by short-term price fluctuations and ignoring the strategic chess game behind it. The U.S. government’s definition of Bitcoin as a “strategic reserve” is not a simple symbolic gesture, but an ultimate confirmation of Bitcoin’s status as “digital gold”. The value of this confirmation, and its far-reaching impact on the future Bitcoin market landscape, is also difficult to reflect in short-term price fluctuations.

!

Matt Hougan, chief investment officer at Bitwise, said that this is extremely beneficial for Bitcoin in the long run. He noted that the Strategic Bitcoin Reserve will:

Significantly reduces the likelihood that the U.S. government will one day “ban” Bitcoin;

Increase the likelihood that other countries will build strategic bitcoin reserves.

Speeding up the pace at which other countries are considering building strategic bitcoin reserves creates a short window for countries to preempt potential additional purchases from the United States.

In addition, this move will also gag many people’s mouths. Since then, it will be more difficult for quasi-government agencies such as the International Monetary Fund to position bitcoin as a dangerous or unsuitable asset.

Therefore, although the market did not react positively to this policy in the short term, the creation of this strategic reserve could have a profound impact on the Bitcoin market in the long term. Investors should look beyond the short-term game and focus on the long-term strategic implications behind this policy.

2. Cognitive barriers to “professional tools”.

The U.S. government’s build-up of a strategic bitcoin reserve is not a whim, but a deliberate strategic move. To achieve this, the government has skillfully used a number of specialized policy tools.

This time, in addition to the explicitly mentioned principle of “budget neutrality” in the “toolbox” of the US government, there may also be ESF (Exchange Rate Stabilization Fund) and amendments to the Gold Reserve Act. While the executive order itself may not directly mention these terms, understanding how they work is critical to understanding the U.S. government’s move.

2.1 “Budget Neutrality”: It’s not that you don’t buy

The executive order makes it clear that the strategy for acquiring more bitcoin must be “budget-neutral,” i.e., “not increase costs for U.S. taxpayers.” At first glance, this phrase may seem to limit the government’s ability to buy bitcoin, and it may also be one of the reasons for the market’s disappointment - if it doesn’t cost money, how much can it buy?

But does “budget neutrality” really mean “don’t buy”?

The answer is clearly no. “Budget neutrality” is more like a strategy of “opening up sources and reducing expenditures”, or more figuratively, a kind of advanced gameplay of “white wolf with empty gloves”. It means that governments can build up Bitcoin reserves in other ways without directly using taxpayers’ budgets.

Where, then, is the “magic” of government? This brings us to the “secret weapon” of the ESF Fund (Exchange Rate Stabilization Fund).

2.2 ESF Fund: The Treasury Department’s “Swiss Army Knife”

The ESF Fund, or Exchange Rate Stabilization Fund, is a special account under the U.S. Department of the Treasury. It was originally established to maintain the stability of the U.S. dollar exchange rate, but with the development of the times, the function of the ESF fund has long gone beyond the original idea and has become a flexible and powerful policy tool in the hands of the U.S. government.

Flexibility of funding sources: ESF funds are primarily funded by income from US dollar assets, such as investment returns from foreign exchange reserves. This means that the government can sell a portion of its foreign exchange reserves (such as euros, yen, etc.) and transfer the proceeds to the ESF fund, which can then be used to buy bitcoins. In this way, the funds for the purchase of bitcoin do not come directly from the taxpayer’s budget, cleverly achieving the goal of “budget neutrality”.

High degree of autonomy in operational authority: The use of ESF funds is largely determined by the U.S. Secretary of the Treasury, without the need for congressional approval. This high degree of autonomy has given the government great flexibility and concealment in its operations. The government can adjust the size of the Bitcoin reserve at any time according to market conditions and strategic needs, without having to disclose details to the outside world openly and transparently.

Successful application in history: This is not the first time that ESF funds have been entrusted with a mission by the U.S. government. Historically, ESF funds have played an important role in key moments on many occasions, such as:

1994 Mexican Financial Crisis: The ESF Fund was used to provide emergency loan assistance to Mexico to help stabilize the peso exchange rate and avoid contagion.

During the subprime mortgage crisis and the pandemic: ESF funds were also used to support financial market liquidity and stabilize market sentiment.

These historical cases show that the ESF fund is a powerful and versatile policy tool, and it is entirely possible for the US government to use the ESF fund to secretly and continuously accumulate bitcoin reserves within a “budget-neutral” framework.

2.3 Gold Reserve Law: Provide a “legal cloak” for Bitcoin reserves

First of all, if you look at the executive order’s reference to Bitcoin as “digital gold” as a simple metaphor, you are mistaken. Because of the existence of the Gold Reserve Law, “digital gold” may become a “policy bridge”, and the government has the opportunity to adopt the method of managing gold to manage bitcoin in the future.

The Gold Reserves Act, as the name suggests, was originally a law that regulated the management of gold reserves in the United States. It explicitly gives the Ministry of Finance custody and disposal of gold reserves and intervenes in the foreign exchange market through the ESF.

Provide a legal framework for strategic asset reserves: At its core, the Gold Reserves Act amendments provide a legal framework for the U.S. government to establish and manage strategic asset reserves. Although the original law was aimed at gold, the interpretation and scope of application of the provisions of the law are flexible. If the U.S. government is interested in including Bitcoin as a “strategic asset”, amendments to the Gold Reserves Act could be a strong legal backing.

The analogy between “digital gold” and “gold reserves”: The executive order defines Bitcoin as “digital gold,” which is by no means a simple metaphor. The positioning of “digital gold” is actually an analogy between Bitcoin and traditional “gold reserves”, suggesting that the government may manage Bitcoin reserves in the same way that gold reserves are managed. The Gold Reserves Law is the key law that regulates the management of “gold reserves”.

“Flexibility” in legal interpretation: The vitality of the law lies in its interpretation and application. The U.S. legal system has a certain degree of “flexibility”, and the interpretation of the Gold Reserves Act may be adjusted with the development of the times and technological progress. If the government intends to promote the legalization and institutionalization of bitcoin reserves, it is entirely possible that the legal profession will interpret the Gold Reserves Law in favor of bitcoin, providing a more solid legal basis for its strategic reserve status.

2.4 Summary

Through the principle of “budget neutrality” and with the help of “professional tools” such as the ESF fund and the “Gold Reserve Act”, the U.S. government is trying to quietly lay out “digital gold” and seize the strategic commanding heights of the “crypto dollar” without alarming Congress and causing controversy.

However, due to the complexity of the U.S. legal system, the court finally held that “gold” in the current law specifically refers to tangible assets, and the direct extension to bitcoin needs to break through the boundaries of legal interpretation. Executive orders alone, then, may face judicial challenges and require explicit congressional authorization.

Plus, there’s a path to take. Bitcoin could be classified as a “non-sovereign asset hedging against macroeconomic risks” under the Strategic and Critical Materials Reserve Act, which may also require explicit authorization from Congress.

Considering the current Republican advantage in the Senate and House of Representatives, it is not as difficult to obtain authorization as it seems. The question is, how high is the priority of the strategic bitcoin reserve in the current government? Is it worth the effort?

If the Trump team realizes that this is another historic opportunity to achieve dollar hegemony after the “golden dollar” and the “petrodollar”. Then, the strategic bitcoin reserve of the United States is another successful “institutional placeholder”, which is very worthy of vigorous promotion.

!

3. Institutional placeholding: a strategic game about the future dominance of money

Now that we understand why the market is undervaluing the strategic Bitcoin reserves, let’s peel aside the fog and examine the U.S. government’s move from a bigger, longer-term perspective to understand its true strategic implications.

**3.1 What is “institutional placeholding”? **

“Institutional positioning”, to put it simply, refers to the preemptive establishment of the status of a certain thing or a certain concept at the institutional level, so as to occupy a favorable position in the future development and grasp the right to formulate rules and discourse.

You can think of “institutional placeholding” as a game of chess. A clever chess player not only focuses on the “pawn” in front of him, but also pays attention to the “position” - occupying the key position on the board first, building a favorable formation, so as to take the initiative in the whole game and finally win.

Competition between countries, especially in emerging technologies and strategic areas, is often a game of “institutional placeholding”. Whoever can take the lead in completing the institutional layout in new fields and new tracks will be able to occupy the first-mover advantage in future development, and even grasp the right to formulate rules, so as to win the strategic initiative.

The core of institutional occupancy lies in “seizing the runway” and “setting standards”.

Grab the runway: In the early stage of the development of emerging fields, the rules and systems are often not perfect, and there is a huge “institutional vacuum”. Countries that take the lead in institutional layout will be able to occupy the development runway first, laying the foundation for their own future development, and may leave other competitors behind.

Standards: The system itself contains standards and rules. Whoever can lead the construction of the system will be able to define the future industry standards and competition rules to a large extent. In global competition, mastering the right to set standards often means mastering the initiative and dominant position of competition.

3.2 Strategic Bitcoin Reserves: The “Institutional Placeholder” of the U.S. “Crypto-Dollar” Strategy

The establishment of the “strategic bitcoin reserve” by the United States is a key step in its “institutional position” in the field of digital currency and even in the future global monetary system. Its strategic intent and placeholder technique can be described as “killing three birds with one stone”, and its cleverness is breathtaking:

Legal placeholding: Through an executive order, rather than a legislative process, the U.S. government has cleverly anchored Bitcoin as a “strategic asset,” establishing Bitcoin’s legal status at the national strategic level. This “legal placeholder” lays the cornerstone for the future compliance and institutionalization of Bitcoin in the U.S. financial system, and also sets an example for other governments to follow.

Placeholder: By defining Bitcoin as “digital gold” and including it in the category of “strategic reserves”, the U.S. government has seized the right to speak on “crypto assets” on a global scale. Through the “official endorsement”, the legitimacy and authority of Bitcoin have been enhanced, and it may guide the “value cognition” and “classification standards” of crypto assets on a global scale, so as to grasp the “rule-making power” of the crypto asset track.

Operational Placeholders: Through the principle of “budget neutrality” and tools such as the ESF Fund, the U.S. government has also completed the “institutional placeholding” at the operational level. The principle of “budget neutrality” can not only reduce the resistance to policy implementation, but also reserve the institutional interface for the flexible increase of Bitcoin reserves in the future; The use of the ESF fund provides operational space and institutional guarantee for the government’s secrecy and continuous accumulation of bitcoins.

It can be said that the establishment of a “strategic bitcoin reserve” by the United States is not just as simple as “holding” some bitcoins, but an “institutional placeholding” that is “well-planned and carefully arranged”. Its strategic goal is not only to “hedge risks” or “store of value”, but to focus on the future transformation of the global monetary system, build a “crypto-dollar” strategy, and compete for the “dominance” of the “digital currency era”. For these contents, I wrote in "Dollar Hegemony

3.0: Trump’s “Decentralized” Conspiracy" has a more detailed explanation.

3.3 The Mirror of History: Successful Cases of Institutional Placeholding

In order to better understand the strategic value and far-reaching impact of “institutional placeholders”, we can review some successful cases of institutional placeholders in history, which may provide us with inspiration and reference.

Case 1: The Fed’s Progressive Institutional Position (1913-1933)

!

The initial “weak” positioning is actually “strategic lurking”: the Federal Reserve, founded in 1913, was originally designed as an “interbank clearing platform”, and its power was severely limited, and even deliberately avoided direct monetary control. This “weak” positioning, at the time, seemed to limit the Fed’s development prospects. However, from the perspective of “institutional occupancy”, this is a kind of “strategic lurking”, which lays the groundwork for the future expansion of the Fed’s power and institutional evolution

Seizing “key occupancy” opportunities in times of crisis: In 1932, when the U.S. economy was mired in the Great Depression, Section 13(3) of the Federal Reserve Act was activated, allowing the Federal Reserve to extend credit to non-bank institutions in “exceptional and emergency situations.” This clause seems to be “inconspicuous”, but it has become an “institutional breakthrough” for the Fed’s power expansion. The Fed skillfully seized the opportunity of “institutional occupancy” in the “crisis moment” and laid the foundation for its future rise.

“Gradual” power expansion eventually became a “central bank of global central banks”: It is with the help of Article 13(3) and a series of subsequent institutional changes and power expansions that the Fed has finally grown from a “weak” clearing platform to a “gradually” core hub for controlling global monetary policy, becoming a veritable “central bank of global central banks”. The rise of the Federal Reserve has taught us that the value of “institutional placeholders” often needs to be fully realized in the long-term evolution.

Case 2: Nested Institutional Placeholder in the Petrodollar System (1974)

!

The “petrodollar” agreement is not a direct challenge to the “gold standard”: after the outbreak of the oil crisis in 1973, the United States and Saudi Arabia reached a secret “petrodollar” agreement, stipulating that Saudi oil transactions must be settled in US dollars. This agreement, on the face of it, is only a “commercial transaction” and does not seem to have anything to do with “institutional occupancy”. However, from a strategic point of view, the “petrodollar” agreement is an extremely clever “nested system placeholder”. The United States cleverly chose “oil” as a “breakthrough” to “save the country from the curve”, and “deeply bound” the US dollar to the pricing power of the global commodity, oil, instead of directly challenging the “gold standard” that was still strong at that time, avoiding direct conflict but achieving a more far-reaching strategic goal.

The “commodity pricing power” binds the US dollar and lays the cornerstone of “dollar hegemony”: The conclusion of the “petrodollar” agreement not only enhances the US dollar’s oil transaction settlement status, but more importantly, it “deeply binds” the US dollar to energy, the “core lifeblood” of the global economy, through the “commodity pricing power”, thus laying the “institutional foundation” for the “global hegemony” of the US dollar in the next 50 years. Even after the collapse of the “gold standard”, the US dollar was still able to hold the “top spot” of the world’s reserve currency, and the “petrodollar” system contributed a lot. The strategic wisdom of “nested system occupancy” can be seen from this.

3.4 Summary: Institutional occupancy, waiting for value revaluation

The mirror of history tells us that the value of “institutional placeholders” often takes time to verify, and it takes strategic patience and long-term vision to truly understand. The U.S. strategic bitcoin reserve may be in the “incubation period” of “institutional occupancy”, and its real strategic value has not yet been fully recognized and priced in by the market.

However, it is foreseeable that once the strategic intention of “institutional placeholding” is generally understood by the market, and once the “institutional dividend” begins to be gradually released, the value of Bitcoin will be revaluated or usher in explosive growth.

Conclusion: The algorithm shakes up the money printing machine, and the code reconstructs Bretton Woods

The establishment of the U.S. strategic bitcoin reserve is by no means a simple asset allocation game, but a “dimensionality reduction attack” by digital civilization on the traditional monetary order. When Trump’s signature fell, we were witnessing not only the “lock-up” of 200,000 bitcoins, but also a quiet financial coup d’état, in which algorithms began to compete with the money printing machine for the right to define the global monetary system.

History always rhymes: in 1971, Nixon closed the gold exchange window, and the dollar broke free from the shackles of the gold standard, ushering in the era of fiat currency hegemony; In 2025, Trump’s inclusion of bitcoin in the national reserve is actually implanting a “digital gene” for the hegemony of the dollar, trying to replicate the ruling logic of the “petrodollar” in the world of code. The subtlety of this “crypto-dollar” strategy is that it both acknowledges that the twilight of the centralized monetary system is approaching, and at the same time tries to perpetuate the twilight of hegemony with decentralized technology.

The short-sighted reaction of the market is similar to that of the bankers who questioned the Special Drawing Rights (SDR) at the Bretton Woods Conference in 1944 – they saw only the ratio of gold to the dollar, but failed to see that institutional stakes would reshape the financial rules of half a century. Now, Bitcoin’s algorithmic code is writing a new monetary constitution: when the state apparatus begins to hoard censorship-resistant assets, it is actually an “escape pod” for the ultimate crisis of sovereign currency. If you also want to have your own escape pod, I have two zero-based tutorials here, one is how to buy bitcoins, and the other is how to send bitcoins to cold wallets, which should be enough for you.

In the future currency war, the outcome may not depend on who has the larger central bank balance sheet, but on who can bring “digital gold” into a more sophisticated strategic nest. Just as the petrodollar once turned black gold into a medium of credit, the crypto-dollar is trying to turn hash into a lever of power. The end of this game may confirm Hayek’s prediction that “the denationalization of money will eventually bury the ghost of Keynesianism” – only this time it is not only the free market, but also the awakened sovereigns.

When the White House deposited bitcoin into “Digital Fort Knox”, it was not only the soft sound of cold wallet encryption, but also the shattering sound of the cornerstone of the old financial order. Algorithms are competing with money printers for the right to define money, and the “dollar” of the future may be shaped by code and hash values.

**Who will be the next “dollar”? **

The answer may lie in Sachs’s statement: “We don’t sell these bitcoins” – because what is really being sold is never cryptocurrency, but the next fifty years of X-dollar hegemony.

At the moment, it’s just that the odds of the “dollar” are a little better.