The U.S. government's Strategic Bitcoin Reserve has incurred a substantial paper loss of approximately $5 billion, as Bitcoin's price has declined by 45% from its peak. The reserve, established in 2025 under an executive order from former President Donald Trump, was initially valued at an estimated $18.5 billion and is now worth around $13.8 billion.
The reserve was created with roughly 200,000 BTC, sourced from seized assets, with a mandate from Executive Order 14096 stating the United States would not sell the bitcoin, maintaining it as a store of reserve assets. The recent losses are unrealized, driven entirely by mark-to-market repricing as Bitcoin's price briefly traded near $60,000 in early 2026, a level not seen since late 2024.
The drawdown occurred during a broader market shock labeled by some as a "Great Crash," characterized by forced deleveraging and declining liquidity. Despite the significant paper loss, officials have maintained the reserve's strategic framing as a long-term hedge against inflationary pressure and national debt, explicitly rejecting the need to respond to short-term volatility. This posture mirrors corporate strategies from firms like MicroStrategy and Metaplanet, which have also absorbed deep unrealized losses while maintaining accumulation plans.
The event highlights a fundamental shift where Bitcoin's volatility is now a fiscal concern at the sovereign level, raising questions about the viability of maintaining such a reserve without sales amid market turbulence. Experts suggest the strategy may require adjustments, and the reserve's future valuation remains fully dependent on Bitcoin's long-term price trajectory.
