Bitcoin breaks 100,000 again, is it driven by US state governments hoarding coins?

Background: Started at the state level, two states have included Bitcoin in their reserves

For cryptocurrency users, the most anticipated policy after Trump's election is definitely the adoption of Bitcoin as a strategic reserve by the United States. However, more than three months after the election, the central government has not taken any action. Is the dream of Bitcoin strategic reserve shattered? Not really. In fact, in just one week, two states in the United States have officially included Bitcoin in their state coffers, and another five states are in the legislative stage. The sources of funds, allocation limits and custody models adopted by each state are actually very different, reflecting the different tolerance of local governments for "high volatility, decentralized assets". This article dismantles with a skeptical eye, who is really planning, who is politically showing off, and where are the potential black swans hiding? And deduce the next impact of this "official HODL" wave on market liquidity and narrative premium.

How about New Hampshire and Arizona?

In just 48 hours, New Hampshire and Arizona passed legislation and had it signed by the governors, marking the first year of state treasury currency holding. The paths and risk control mechanisms taken by the two states are almost diametrically opposed, fully exposing the trade-offs under different political and economic goals.

New Hampshire HB 302｜Active funding, single BTC deposit, ceiling

New Hampshire's approach is most like "treasury-level asset diversification." The provision authorizes the state treasurer to directly exchange up to 5% of the general fund and rainy day fund for digital assets with a market value of more than $500 billion for one consecutive year. In fact, only Bitcoin qualifies.

Legislators emphasize that this 5% cap is a safety valve: if the fiscal pool expands or shrinks, the currency holding quota will be adjusted accordingly to avoid a one-time heavy position. However, the article is vague about whether the fund is forced to sell in proportion when the fund size shrinks, leaving a gray area for accounting treatment.

In terms of custody, HB 302 provides three options:

1. The state treasury manages its own multi-signature cold wallet;
2. Entrusted to a licensed special purpose depository institution (SPDI) or other regulated bank;
3. Holding Bitcoin through an SEC or NFA approved Bitcoin ETF

If you choose a cold wallet, self-management must meet seven technical standards, including geographical dispersion, hardware isolation and annual penetration testing, to block the risk of private key leakage as much as possible. But if you choose an ETF, the state treasury actually only gets a trust certificate - transparency returns to the traditional financial ledger, which contradicts the advantage of "seeing and tracking" on the chain.

In terms of information disclosure, the state treasurer must list the positions, costs and unrealized profits and losses in the quarterly financial report; the legislators who support the bill verbally promised to "publish the on-chain address" to enhance transparency, but this is not included in the mandatory clauses. The provisions also completely prohibit leverage, lending or mortgages, intending to reduce credit risk to zero, at the cost of giving up all interest-enhancing measures.

New Hampshire follows the route of "asset diversification at the Treasury level," with a small proportion, single asset, and extreme conservatism, but it also directly ties taxpayers to the BTC price roller coaster.

Arizona HB 2749｜Passive Incorporation, Zero Taxation, Staking Allowed

Arizona considers "not spending a penny of tax money" as its core selling point. The new law allows the state government to transfer unowned crypto assets (including those with incomplete but identifiable private keys) to the newly established "Bitcoin and Digital Asset Reserve Fund" after the three-year search period expires.

Arizona State Legislature. From then on, the fund can also legally receive all derived airdrops and staking rewards, forming a compound interest cycle without having to add budget to the parliament.

Even more daring is the scope of the target. The provisions do not have any market value or liquidity thresholds. As long as it falls into the hands of the state, it can be included in the warehouse. In theory, everything from Bitcoin to meme coins with daily trading volumes of only tens of thousands of dollars may be included; the state government relies on diversified holdings to diversify risks, but it also exposes itself to the high-explosive minefield of small coin price manipulation.

Custody must be handed over to a licensed compliant institution in Arizona; during this period, assets are allowed to participate in the whole chain staking to earn income. This makes the state treasury an active player on the chain for the first time. If the validator is fined (slashing) or the smart contract fails, the loss will also fall on the public account.

In terms of liquidity allocation, 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 locked by legislation and cannot be used unless otherwise legislated. Information disclosure adopts the dual check of "annual report + congressional appropriation before expenditure", but there is no mandatory disclosure of the on-chain address, and the transparency is lower than the decentralization standard.

Arizona treats BTC as "found money that earns interest" and amplifies its idle value through staking and airdrops, cleverly avoiding taxpayers' questions, but also putting the state treasury at the forefront of on-chain operational risks.

What should we as investors pay attention to?

1. Buying scale: Even if NH is fully invested, it is only 300-400 million US dollars, which has limited impact on BTC liquidity; AZ is even a drop in the bucket in the early stage.
2. Narrative bonus: Official endorsement + "zero tax burden" story is enough to boost short-term sentiment, but cash flow will not flow in immediately.
3. Risk control comparison: NH uses "cap + cold wallet" in exchange for low returns; AZ uses "cost-free staking" in exchange for high technology/contract risks. Both models are not a panacea.
4. Black Swan: If BTC drops by more than 20% in a single day, NH may be forced to depreciate due to accounting evaluation; AZ will have to face staking slashing or custody accidents, which are enough for the opposition to overturn the case in the state parliament.

Core Differences

What is the situation in other states?

1. The key is Texas: If the case is successfully arranged and the funds are allocated before June 2, it will mark the first case of "large-scale public money buying currency", and the narrative will be amplified. On the contrary, if even Texas is stuck, it will be even more difficult to mobilize subsequent states.
2. Buying ≠ legislation: Even if the bill is passed, budget appropriations still need to be decided separately; investors should continue to track the appropriation bill and the disclosure of the on-chain wallet address.
3. The terms vary greatly: from Texas' "active grant + single BTC pledge" to Illinois' "pure donation + five-year lock-up", the risk/return curves are different, and subsequent states may choose the best mix.

Conclusion: Does the scale of buying bring about a real effect? Emotions are the first to create hype

New Hampshire allows the state treasury to transfer up to 5% of general/rainy day funds into Bitcoin. The state fiscal year budget is less than $7 billion, and even if fully invested, it is only $300-400 million; Arizona has even "passively incorporated" unowned crypto assets for more than three years, and it is difficult to even reach the billion level in the short term. In contrast, Bitcoin's 24-hour spot trading volume has long maintained $60-70 billion. Even if the state government buys in once, it only accounts for <0.1% of the market's daily liquidity. The voice of legislation is greater than the actual amount of funds; the price reaction is more of an emotional transaction rather than an imbalance in spot supply and demand.

The two state bills were signed on May 6 (NH) and May 8 (AZ) respectively; Bitcoin rose from 96K to nearly 100K within 48 hours, a weekly increase of about 3%. According to Axios statistics, social media discussions related to the keyword "Bitcoin Reserve" increased by more than 240% during the same period. However, the trading volume did not increase synchronously, pointing to a "headline rally" rather than a large amount of spot absorption.

In addition, Glassnode pointed out that the 30-day actual annualized volatility has fallen back to 45-50%, the lowest range since 2021, but the long-term historical range is often above 60%, which is still not comparable to traditional assets. If Black-Swan falls by more than 20% within a day, New Hampshire's 5% holdings will immediately face impairment pressure, while Arizona will also have to bear the additional risk of slashing or custody contract errors.

The official HODL narrative has been "half-baked" by the market, and what really determines the market is the speed of legislation and the actual amount of fiscal appropriations. Only when legislation + appropriations + on-chain addresses are established at the same time can it be said that the main reason for the rise in Bitcoin prices can be attributed to the state strategic reserve.