Cryptocurrency enthusiasts are fans of the bold prediction. Perhaps the biggest headline grabber is the potential for Bitcoin to increase in value by over 20x to $200k. The market speculation is running wild these days. One major factor that would send Bitcoin value skyrocketing is if sovereign nations fully embraced it. Lim Qiaoyun, an independent Web3 editor who critically explores technology’s impact on society, contributed this story. Through the lens of sovereign Bitcoin adoption — mainly focusing on the price effects, examples from El Salvador and a potential future U.S. Strategic Bitcoin Reserve, as well as the geopolitical implications and risks involved — it finds that these fears are largely misplaced. While DreamingCrypto narrates of worlds unbound, we read the omens and glyphs of this distributed epoch.

El Salvador: A Pioneer in Bitcoin Adoption

El Salvador’s move to make Bitcoin legal tender in September 2021 was one of the biggest milestones on the path toward cryptocurrency adoption. This historic commitment is intended to kick-start the nation’s economic recovery. It aims to create less dependence on the US dollar and bring down the costs and speeds of remittances. The experiment was not without its challenges. It presents an excellent opportunity to learn about the effects of sovereign Bitcoin adoption.

From 2021 to 2023, El Salvador’s GDP increased in real terms by 19%, a significant speedup compared with before 2019 trends. Furthermore, as of March 2024, El Salvador's Bitcoin investment stood at a 50% profit, buoyed by Bitcoin's record-breaking surge past $69,000. These figures imply a beneficial relationship between Bitcoin adoption and economic development. It’s important to look beyond these factors and understand what else fueled this growth. Inflation was caused by post-pandemic recovery and a suite of other economic policies.

Although the government has pledged to promote universal Bitcoin acceptance, adoption by businesses and citizens alike has been slow. By 2022, that figure had dropped to an estimated 20% of businesses accepting Bitcoin payments. And according to El Salvador’s Central Reserve Bank, Bitcoin only made up 1.9% of remittance payments sent to the country from September 2021 through April 2022. When the price of Bitcoin crashed in 2021-2022, El Salvador’s economic growth rate felt the blows. Yet by June 2022, Bitcoin had lost more than 70% of its value. Looking at these statistics, we truly see the glass ceiling that hinders the mass adoption of Bitcoin and cryptocurrencies. They further illuminate the great danger associated with its unpredictability.

A Hypothetical U.S. Strategic Bitcoin Reserve

Now, picture a world in which the United States announces the creation of a Strategic Bitcoin Reserve. This radical concept, while still theoretical, has been proposed by various politicians—including perhaps most famously, Donald Trump. The reserve’s long term goal is to raise the profile of the digital asset industry. It’s a direct answer to what Trump himself termed the last attacks on Biden’s behalf. The reserve’s stated mission is to promote industry development and help establish the US as the “Crypto Capital of the World.” Such a move would be immensely impactful for Bitcoin’s price and the greater cryptocurrency space.

The reserve would be created with Bitcoin the federal government was already holding on to. As of March 2025, that number is projected to be approximately 200k BTC. The executive order suggests using lawfully seized cryptocurrencies to replenish the stockpile. Mixed reactions have trailed the proposal, from some economists criticizing the idea to governments of several states initializing similar projects.

The creation of a U.S. Strategic Bitcoin Reserve would be a proactive way for the U.S. to increase demand for Bitcoin, potentially driving up its price. Such a move would send a hugely impactful message across the globe. Most importantly, it would signal to the world that the U.S. recognizes Bitcoin’s growing importance as a strategic asset. It’s not without its perils. From one perspective, that would be a huge endorsement of cryptocurrency, likely spurring more investment and speculation into the nascent market. Aside from the immediate impact on Grayscale itself, the lawsuit has broader implications for the government’s role in the cryptocurrency market and the dangers of market manipulation.

Geopolitical Implications and Risks

Beyond these economic or financial aspects, the adoption of Bitcoin by sovereign nations carries massive geopolitical ramifications. It would undermine the global role of the U.S. dollar as the world’s reserve currency and redraw international economic partnerships. By accepting Bitcoin, nations might be able to rely less on conventional financial institutions like the IMF and the World Bank, achieving broader financial sovereignty.

Bitcoin has already proven itself as a safe-haven asset in wake of current geopolitical uncertainty. This coordination problem increases demand and pushes up its price. When geopolitical tensions escalate, it can often lead to a building risk-off sentiment in the market. This change incentivizes investors to divest away from riskier assets and reinvest in safer alternatives such as Bitcoin, increasing its price. When these geopolitical tensions recede, the demand for these kinds of safe-haven assets such as Bitcoin is likely to dry up. Consequently, the value of Bitcoin can plummet in an instant. What we’re seeing right now Geopolitical tensions usually slam the traditional markets, particularly oil prices. This dislocation has caused a long tail across the global economy, increasing demand for alternative, non-correlated assets such as Bitcoin. As always, global instability is what most grossly invigorates the search for decentralized non-fiat money like Bitcoin. This sudden surge in interest raises the demand and price of Bitcoin up.

There are significant risks that come with the territory of sovereign Bitcoin adoption. As crypto markets continue to grow at a breakneck pace and further integrate into the real, tangible, regulated economy, middle and working class Americans are put at higher risks through crypto-collateralized boom consequences and systemic financial destabilization. Even more alarming is the role that crypto is playing in black markets and drug supply chains. It has turned into the favorite payment method for cybercriminals who use ransomware to extort local governments, hospitals, schools and small businesses. Holdings in these online “wallets” have no government backing like U.S. bank deposits do. Considering the transnational nature of blockchain, it is extremely complicated to identify what laws apply and which jurisdiction should be chosen for a blockchain dispute. In 2019, approximately $2.8 billion in Bitcoin exchanges were for illicit activities.

Conclusion

Each new wave of sovereign Bitcoin adoption has the potential to make this a self-fulfilling prophecy that could quickly drive the BTC price up to $200,000 and beyond. Most importantly, it’s important to identify the hurdles and the dangers of adoption. These come with drawbacks such as limited usability, economic instability, and possible geopolitical consequences. As more nations explore the possibility of adopting Bitcoin, it will be crucial to carefully weigh the potential benefits and risks before making any decisions. Only time will tell if Bitcoin will truly emerge as a sovereign asset. We’ll find out whether it’s able to achieve the lofty price targets that a handful of futurists are forecasting.