Background: State-Level Initiatives with Two States Already Incorporating Bitcoin into Reserves
For cryptocurrency enthusiasts, one of the most anticipated policies following Trump's election was the adoption of Bitcoin as a strategic reserve by the U.S. However, over three months post-election, the central government has yet to take any significant action. Has the hope for Bitcoin as a strategic reserve been shattered? Not quite. In just the past week, two U.S. states have officially included Bitcoin in their state treasuries, with another five states in the legislative phase, ready to follow suit. The funding sources, allocation caps, and custody models adopted by these states vary significantly, reflecting different local governments' tolerance for "high-volatility, decentralized assets." This article dissects these initiatives with a skeptical eye to identify who is genuinely positioning, who is merely posturing politically, and where potential black swans might be hiding. It also explores the potential impact of this "official HODL" wave on market liquidity and narrative premium.
How New Hampshire and Arizona Are Playing the Game
Within a mere 48 hours, New Hampshire and Arizona successively completed legislation and had their governors sign off, marking the beginning of state treasury holdings of Bitcoin. The approaches and risk control mechanisms adopted by these two states are almost entirely different, fully exposing the trade-offs made under different political and economic objectives.
New Hampshire HB 302: Proactive Allocation, Single-Asset Focus, and a Ceiling
New Hampshire's approach most closely resembles "Treasury-level asset diversification." The legislation authorizes the state treasurer to allocate up to 5% of the general fund and rainy-day fund directly into digital assets with a market value exceeding $500 billion for a consecutive year—effectively qualifying only Bitcoin.
Legislators emphasized that this 5% cap acts as a safety valve: if the fiscal pool expands or contracts, the Bitcoin holdings will adjust accordingly to avoid a one-time heavy allocation. However, the legislation is ambiguous about whether proportionate sales are required when the fund size shrinks, leaving a gray area in accounting treatment.
In terms of custody, HB 302 offers three options:
The state treasury manages its own multi-signature cold wallet.
The assets are held by a licensed "Special Purpose Depository Institution (SPDI)" or other regulated bank.
The assets are held through a Bitcoin ETF approved by the SEC or NFA.
If the state chooses a cold wallet, self-management must meet seven technical standards, including geographical dispersion, hardware isolation, and annual penetration testing, to minimize the risk of private key leakage. However, if an ETF is chosen, the state treasury essentially holds a trust certificate—transparency reverts to the traditional financial ledger, contradicting the on-chain advantages of "visibility and traceability."
In terms of information disclosure, the state treasurer is required to list the holdings, costs, and unrealized gains/losses quarterly in the financial report. Legislators supporting the bill verbally promised to "publish the on-chain address" to enhance transparency, but this was not included in the mandatory clauses. The legislation also completely bans the use of leverage, borrowing, or collateral, aiming to eliminate credit risk at the cost of forgoing all interest-enhancing methods.
New Hampshire's approach is a "Treasury-level asset diversification" strategy, characterized by a small proportion, single asset, and extreme conservatism. However, it also directly ties taxpayers to the Bitcoin price rollercoaster.
Arizona HB 2749: Passive Inclusion, Zero Tax Burden, and Staking Allowed
Arizona's core selling point is "not using a single cent of tax money." The new law allows the state government to transfer unclaimed crypto assets (including those with incomplete but identifiable private keys) into a newly established "Bitcoin and Digital Asset Reserve Fund" after the three-year search period expires.
From then on, the fund can legally receive all derivative airdrops and staking rewards, creating a compounding cycle without needing additional budget approval from the legislature.
More boldly, the legislation sets no market value or liquidity thresholds for the assets. Essentially, anything from Bitcoin to low-volume meme coins with daily trading volumes of only tens of thousands of dollars could be included. The state relies on portfolio diversification to mitigate risks but also exposes itself to the high-risk zone of small-coin price manipulation.
Custody must be entrusted to a licensed compliant institution in Arizona. During this period, assets are allowed to participate in full-chain staking to earn rewards. This makes the state treasury an active on-chain player for the first time. If there is a validator slashing or smart contract error, the losses will fall on the public sector.
In terms of liquidity management, HB 2749 only allows the state treasurer to convert up to 10% of non-Bitcoin holdings into cash to subsidize general fund expenditures. The BTC portion is legislatively locked and cannot be touched unless there is separate legislation. Information disclosure is subject to a "yearly report + legislative appropriation" double-check, but there is no mandatory public disclosure of on-chain addresses, resulting in transparency below the decentralized standard.
Arizona treats BTC as "found money that earns interest," using staking and airdrops to amplify idle value. It cleverly avoids taxpayer scrutiny but also places the state treasury on the front line of on-chain operational risks.
What Should Investors Pay Attention To?
Buy-in Scale: New Hampshire's full allocation would only amount to $300–400 million, which has limited impact on BTC liquidity; Arizona's initial amount is even smaller.
Narrative Boost: Official endorsement and the "zero tax burden" story are enough to boost short-term sentiment, but cash flow will not immediately flood in.
Risk Control Comparison: New Hampshire uses "caps + cold wallets" for lower returns; Arizona uses "cost-free staking" for higher technical/contractual risks. Neither model is a panacea.
Black Swan Risks: If BTC experiences a single-day drop of >20%, New Hampshire may face impairment due to accounting evaluations; Arizona needs to deal with staking slashing or custody accidents, both of which could lead to opposition flipping the case in the state legislature.
Core Differences
Dimension | New Hampshire | Arizona |
|---|---|---|
Motivation | Public fund diversification | Activation of unclaimed assets |
Funding Approach | Proactive allocation, immediate purchase | Passive inclusion, no new purchases |
Holding Structure | 100% BTC (market cap threshold) | BTC + any assets that enter the fund |
Profit Strategy | Pure price difference, no leverage | Staking/airdrops allowed, compounding returns |
Liquidity Exit | Full sale possible | BTC permanently locked, non-BTC up to 10% can be allocated |
Political Bet | Directly betting taxpayers' wallets | "Zero-cost" political stance |
Status of Other States
State | Progress | Latest Update | Key Points | Potential Buy-in Scale / Mechanism Highlights | Main Obstacles or Risks |
|---|---|---|---|---|---|
Texas | High | Senate passed in February, out of House Finance Committee; awaiting full chamber vote before June 2 | • Establish Texas Strategic Bitcoin Reserve<br>• Funding: State allocation + private donations; initial proposed allocation of $21 million<br>• Target limited to BTC (market cap ≥ $500 billion)<br>• Managed by the Comptroller, with biennial performance reports | If funded, it will be the first major state to actively buy coins with public funds; scale still <1% of BTC daily trading volume | House scheduling and partisan wrangling; if overdue, it will automatically fail |
Oklahoma | Medium | House passed 77:15 in March, but Senate Finance Committee rejected on April 14, failing this session | • Allow state treasury + pension funds to allocate BTC | If revived, it could inject pension-level funds | Pension risk exposure strongly opposed by unions and Democrats; terms must be deleted for a chance to reintroduce |
Illinois | Low | HB 1844 only completed first reading, still stuck in Rules Committee | • Only accept donated BTC, state treasury cannot actively buy<br>• 5-year mandatory HODL before use | Entirely dependent on donation willingness; near-zero short-term buy-in | No new public fund exposure, low political resistance but also unlikely to have a substantial impact |
Missouri | Stagnant | Public hearing completed on March 24, no further scheduling | • Can accept donations and allow state treasury to manage its own cold wallet | Theoretically can actively buy, but requires subsequent funding; progress stagnant | Crowded legislative agenda, low priority |
Florida | Withdrawn | HB 487 / SB 550 "withdrawn" on May 6 | • Originally proposed allowing public funds to invest in BTC, no market cap threshold | Withdrawal = zero short-term buy-in | Senate finance leader says "too volatile, not in line with conservative finance"; friendly state avoids the spotlight for now |
Key to Everything: Texas
If Texas successfully schedules and allocates funds before June 2, it will mark the first "large-scale public fund purchase" case, and the narrative will be amplified. Conversely, if even Texas gets stuck, it will be even harder for subsequent states to mobilize.
Buy-in ≠ Legislation
Even if the bills pass, budget allocations still need separate resolutions; investors should continue to track funding bills and the public disclosure of on-chain wallet addresses.
Significant Differences in Legislation
From Texas's "proactive allocation + single-asset BTC" to Illinois's "pure donation + five-year lockup," the risk/reward curves vary significantly. Subsequent states may opt to mix and match the best features.
Conclusion: Does Buy-in Scale Have a Material Impact? Sentiment Drives the Show First
New Hampshire allows the state treasury to convert up to 5% of general/rainy-day funds into Bitcoin. With a state fiscal budget of less than $7 billion, even a full allocation is estimated to be only $300–400 million. Arizona is "passively collecting" unclaimed crypto assets over three years, making it difficult to reach even a hundred million in the short term. In comparison, Bitcoin's 24-hour spot trading volume consistently remains at $60–70 billion. Even if state governments enter the market all at once, it would only account for <0.1% of daily market liquidity. The legislative noise is louder than the actual capital volume; price reactions are more driven by sentiment trading rather than spot supply and demand imbalances.
The two state bills were signed on May 6 (NH) and May 8 (AZ). Bitcoin rose from $96,000 to nearly $100,000 within 48 hours, with a weekly increase of about 3%. According to Axios statistics, social media discussions related to the keyword "Bitcoin Reserve" increased by over 240% during the same period. However, trading volumes did not expand in tandem, indicating a "headline rally" rather than significant spot absorption.
Additionally, Glassnode pointed out that the 30-day actual annualized volatility has dropped to 45–50%, the lowest range since 2021. However, the long-term historical range is often above 60%, still incomparable to traditional assets. If a Black Swan event causes an intra-day drop of >20%, New Hampshire's 5% holding will immediately face impairment pressure, and Arizona will also have to bear the additional risks of staking slashing or custody contract errors.
The official HODL narrative has already been "half-hyped" by the market. What truly determines the market trend is the speed of legislative implementation and the actual amount of fiscal allocations. Only when legislation, funding, and on-chain addresses are all in place can we say that the main driver of Bitcoin's price increase can be attributed to state strategic reserves.
