Major Shift: The U.S. Now Holds Bitcoin in Reserves

INSIGHT WEEKLY: March 9, 2025

📩 Images not loading? Click “Download external images” or read the full magazine online via the link above.

⏳ 5 minutes. One magazine. The insights that matter. No fluff, no overload—just what you need to stay well-informed

🌐 Markets Overview

Markets:

Markets have been sliding, weighed down by uncertainty over tariffs, inflation, and slowing growth.

This week has been the worst for U.S. markets since early September.

Some rotation out of the U.S. has benefitted European markets, with STOXX50 and FTSE100 setting new records during the week.

What is the sentiment?

The EPU index measures and tracks uncertainty in government policies, regulations, and economic direction by analyzing news coverage, tax expirations, and expert forecasts. It is a good indicator of long-term trends.

The VIX is sometimes known as the “fear gauge” and shows expected volatility in the US stock market over the next 30 days.

The charts indicate that, though uncertainty has increased for the wider economy, the volatility in the stock market is not expected to increase significantly over the next 30 days. 

Market decline v all-time highs

U.S. markets are well below their all-time highs, with the Nasdaq drifting into official correction territory by dropping more than 10% from its all-time high in the last week.

Magnificent 7:

Tesla stock declined 10% in the week, bringing the YTD decline to 35%.

The drop in EU and UK sales and competition from other EV manufacturers are the major reasons, as well as some reactions from consumers to Elon Musk’s political activism.

Meta is the only one of the Mag 7 that is positive year-to-date due to good results, AI prospects, and user engagement growth.

Major Semiconductor stocks:

Semiconductors were mixed during the week. Only Intel (Nvidia and Broadcom are evaluating Intel’s 18A manufacturing process) and Texas Instruments (diversification, good results) were positive this year.

Tariff Watch - Key Tariff Developments This Week (March 3 – March 8, 2025)

USMCA Tariffs: The U.S. extended the delay on tariffs for USMCA-compliant goods from Canada and Mexico until April 2, 2025, instead of the initial March 4 deadline.

Canada and Mexico are now in ongoing negotiations for further extensions or exemptions.

Canada’s Retaliatory Tariffs: Canada postponed its second wave of retaliatory tariffs on $125 billion worth of U.S. goods to align with the U.S. deferral, keeping trade tensions in flux.

Mexico’s Response Pending: Mexico has yet to announce specific countermeasures, but it has confirmed it will disclose its plan by March 9, 2025.

EU Trade Tensions: The European Union is reviewing retaliatory measures against U.S. tariffs, with escalating tensions over auto and agricultural trade policies.

China & South Korea: Both nations are monitoring the economic impact of recently implemented tariffs, particularly in EV battery production and broader trade relations.

🇺🇸 Spotlight on US Reserves

The U.S. government manages several key reserves that serve as economic buffers, strategic assets, and financial stabilizers.

🟡 Gold Reserves: The Traditional Safe Haven

The U.S. holds 8,133.5 metric tons of gold, making it the largest sovereign gold holder in the world. Much of it is stored at Fort Knox, the Federal Reserve Bank of New York, and West Point. Gold has historically been a hedge against inflation and financial crises.

💱 Foreign Exchange Reserves: A Surprisingly Small Holding

Unlike other major economies, the U.S. keeps a relatively modest amount of foreign currencies (~$200 billion). It mainly holds euros, yen, and pounds, but the real strength comes from the global dominance of the U.S. dollar, which reduces the need for large FX reserves.

🛢️ Strategic Petroleum Reserve (SPR): The Energy Backstop

The U.S. SPR currently holds ~362 million barrels of crude oil, making it the largest emergency oil supply in the world. It’s used to counteract supply shocks and geopolitical risks.

📜 U.S. Treasury Securities: The Global Safe Asset

While not a traditional “reserve,” the U.S. holds trillions in Treasury bonds, which help stabilize interest rates and fund government spending. These securities are also a core part of the Federal Reserve’s toolkit for managing economic conditions.

₿ Bitcoin Reserve (see below 👇 in crypto section)

With gold, oil, foreign exchange, and now Bitcoin in the mix, the U.S. is diversifying its reserves. Will other governments follow suit? 🚀

🌐 Economy Overview

🇺🇸 US economy

Trade tariffs began to impact markets. On March 4, 2025, the Trump administration implemented tariffs on imports from Canada and Mexico, although USMCA-compliant goods received a temporary reprieve until April 2.

Additionally, the tariff rate on Chinese imports doubled from 10% to 20%.

Labor market was mixed. 151,000 jobs were added in February, slightly below expectations but still an improvement over January’s weak numbers. The unemployment rate edged up to 4.1%, reflecting a cooling trend.

Manufacturing data from ISM (Institute for Supply Management) indicated a slowdown, with the manufacturing PMI slipping to 50.3%, down from 50.9% in January. However, the services sector showed resilience, with a PMI reading of 53.5%, signaling continued expansion..

The next Federal Reserve meeting on interest rates is scheduled for March 18,19.

S&P 500 is -1.9% in the year to date.

🇨🇳 China

Retaliation by China against new U.S. tariffs by introducing levies on U.S. crude oil, liquefied natural gas, and agricultural machinery. These countermeasures follow a broader strategy to reduce reliance on Western markets and pivot toward domestic-driven economic growth.

There have also been increased efforts to stimulate consumer spending, aiming to mitigate the effects of slowing exports and deflationary pressures. Analysts expect further monetary easing and fiscal stimulus to counteract global trade disruptions.

🇯🇵 Japan

Tariffs were the major discussion point, with Japanese policymakers emphasizing global trade stability, particularly in response to the ongoing U.S. tariffs.

Japanese and British officials held their first “two-plus-two” economic dialogue, reinforcing their commitment to free trade and supply chain cooperation. These discussions highlighted the risk of protectionist policies disrupting Japan’s export-driven economy.

Nikkei 225 declined further in the week and is 7.5% in the year to date.

If you like this newsletter, please send this link to friends, family, and colleagues and post it on social media. https://insight-weekly.beehiiv.com/subscribe

🌐 Artificial Intelligence and Tech

This cover has been designed using assets from Freepik.com

Evolution of AI models

Here is a table that compares the leading products on the market at present.

Alibaba Cloud has introduced QwQ-32B, a 32-billion parameter AI model designed to enhance capabilities in mathematical reasoning, coding, and problem-solving.

Is this another DeepSeek moment?

The model may have fewer parameters than DeepSeek’s R1, but it’s proving to be just as powerful—and even more efficient. This puts Alibaba in a strong position to challenge DeepSeek for the top spot in China’s AI race. Investors took notice, with Alibaba’s stock jumping 8.4% in Hong Kong and 1.4% in the U.S. after the announcement.

That’s not all. Alibaba is planning a massive $52.4 billion investment in cloud computing and AI over the next three years.

OpenAI is rolling out premium AI agents, including Phd level agents for research!

These are for specialized professional tasks, with pricing reflecting their advanced capabilities. Here’s the breakdown:

• Knowledge AI ($2,000/month) – Assists professionals with research, data analysis, and content generation.

• Software AI ($10,000/month) – Supports developers and engineers, optimizing coding workflows.

• PhD-Level Research AI ($20,000/month) – Functions as a virtual PhD researcher, capable of conducting complex academic and technical analysis.

This marks OpenAI’s shift toward enterprise AI, offering task-specific, high-performance models beyond standard ChatGPT.

Get your free guide to AI

See the previous spotlight on AI chips 

🌐 Crypto Corner

Top 10 cryptos:

Cardano and Ethereum responded with large gains to the prospect of being included in the US Digital Asset Stockpile.

Bitcoin reserve set up by the U.S. for the first time.

Which countries now have a Bitcoin reserve?

El Salvador → Holds over 5,750 BTC after adopting Bitcoin as legal tender in 2021.

Bhutan → Secretly built a Bitcoin mining operation and accumulated over 12,000 BTC.

United States → Has seized over 200,000 BTC from criminal cases, now partially reclassified under the new Strategic Bitcoin Reserve.

On March 7, 2025, President Donald Trump signed an executive order establishing a Strategic Bitcoin Reserve to strengthen the U.S. position in digital assets. This reserve will primarily consist of Bitcoin (BTC) acquired through criminal and civil asset forfeitures.

Additionally, a Digital Asset Stockpile will be set up that may include Ethereum (ETH), Ripple (XRP), Solana (SOL), and Cardano (ADA).

Why has the US decided to hold a Bitcoin Reserve?

• Diversification of National Reserves → Holding BTC provides an alternative store of value alongside gold and foreign exchange reserves.

• Hedge Against Inflation & Currency Devaluation → Bitcoin’s fixed supply (21 million coins) makes it an attractive hedge, similar to gold.

• Strategic Financial Leverage → A BTC reserve enhances a country’s ability to navigate geopolitical risks and financial sanctions.

• Digital Asset Leadership → Strengthening the U.S. role in blockchain innovation and the evolving global financial system.

Want to know more? See this link from the White House.

See the previous spotlight on Bitcoin halving

🏅5️⃣ Billionaire Leaderboard

Mostly driven by stock market performance :

1. Elon Musk (Tesla, SpaceX) $342bn ⬇️ $17bn

2. Mark Zuckerberg  (Facebook/Meta) $216bn ⬇️ $14bn

3. Jeff Bezos (Amazon) $215bn ⬇️ $12bn

4. Larry Ellison (Oracle) $191bn ⬇️ $13bn

5. Bernard Arnault and family (LVMH) $177bn ⬇️ $9bn

SPOTLIGHTS

Links to earlier spotlights :

Residential property ;

Japan ;

India - an emerging economic power ;

Recession ;

AI chips ;

Bitcoin halving ;

US National Debt ;

Gold ;

Nvidia ;

The $84 trillion wealth transfer ;

Crowdstrike issue