One of the great things about looking into cryptocurrencies at this time in history is that, while it’s known, it is still not widely adopted.
And, if you’re paying attention to the writing on the proverbial wall, that could spell out opportunity for those observant enough to grasp it.
To start this discussion, we should probably start with talking about the elephant in the room.
The effect of Trump’s announcement of a Federal cryptocurrency reserve on prices.
That effect? Not much, really, which surprised some people as they expected for Trump’s announcement of the reserve to immediately start driving prices up.
But cryptocurrency investing is a long game. It’s for people not making knee jerk reactive decisions but who hold true to their long term vision for their cryptocurrency portfolio. Crypto is for those who HODL (buy and hold on for dear life).
So, some people were confused when they didn’t see bitcoin prices rise immediately upon Trump’s announcement.
Why didn’t they immediately jump? Harrison Miller with Investor’s Business Daily explains:
White House plans for a U.S. strategic bitcoin reserve fired up optimism among the world’s crypto enthusiasts. But until this past week, the currency itself barely flickered as recent trade war and tariff news whipsawed markets.
So, other factors kept bitcoin prices from spiking upward immediately.
But remember: cryptocurrencies are a long game, and…
That expected valuation change is showing signs of starting.
That’s right, bitcoin valuations are starting to rise.
Why now, you may ask?
It’s a good question. Karrie Gordon with VettaFi gives us this answer:
Ongoing tariff volatility, ratcheting tensions between the U.S. and China, and dollar deterioration concerns weigh heavily on April markets. As investors de-risked their portfolios, crypto proved a notable beneficiary amid market chaos. Advisors and investors flooded into crypto assets the week ending April 25, 2025, reported CoinShares. In total, $3.4 billion flowed into digital asset strategies, the third largest weekly inflow on record.
That’s a good amount of capital flowing into cryptocurrencies.
And the fact of the matter is that investment levels into cryptocurrencies could continue to increase.
There are a few reasons for optimism on that front.
The first reason is…
The “Flywheel Effect” explained
Now, if you’re unfamiliar with that term, take heart and continue reading.
The way that we’re applying that term specifically to cryptocurrencies has to do with expectations of increased consumer interest in cryptocurrencies which, of course, will drive up values.
Miller gives us a major reason for the expected increase in consumer interest:
[Matthew Sigel, head of digital asset research at VanEck] noted a “handful” of proposals for governments like Japan, Germany and Sweden to buy bitcoin on the open market. These efforts have not gathered a bipartisan consensus and look unlikely in the near term.
But if other countries get involved and start announcing bitcoin purchases, it could spark a worldwide race for the industry.
And that’s where we get to the Flywheel Effect.
“I think it’s going to have a very strong impact,” [Greg Benhaim, vice president of product at digital asset manager 3iQ] said. “If the U.S. or China or Russia were to publicly announce that they’ve acquired X number of bitcoin and are going to continue doing so, and they view it as essential for their sovereign wealth, it’s going to create a flywheel effect where everyone is going to rush to accumulate more.” The flywheel effect is a concept popularized by author Jim Collins that describes how small wins for businesses over time spark exponential growth.
For bitcoin, the momentum likely will start slow but will “really accelerate” once larger countries jump in, Benhaim predicts.
Put simply, as more governments buy more cryptocurrencies for their reserves, that will both have a shrinking effect on the supply and create consumer confidence in cryptocurrencies. That confidence will create demand.
Both decreasing supply and increasing demand will drive up prices.
And, then, there’s the ETF factor
National strategic reserves aren’t the only things expected to drive up cryptocurrency valuations.
Being able to buy cryptocurrencies in an investment “vehicle” that is more familiar to them will also make consumers more comfortable with cryptocurrencies and, thus, will drive up demand. James Royal, Ph.D. with Bankrate writes,
New cryptocurrency exchange-traded funds (ETFs) are on the way, following the approval of Bitcoin and Ethereum ETFs in 2024. The new crypto funds would allow traders to purchase cryptocurrencies such as Solana and XRP through a low-cost fund, making these cryptos more accessible to clients of traditional brokerages, and potentially raising their prices.
Average consumers are already familiar with funds such as mutual funds, and they’re comfortable dealing with brokerages.
Being more comfortable and buying in a vehicle that looks like what they’re already used to dealing with will have more consumers buying cryptocurrencies, driving up demand even more.
The important thing for you to remember, though…
… is that you haven’t missed the boat to take advantage of the Flywheel Effect’s impact on bitcoin and cryptocurrencies in general.
You can still jump in now to be a relatively early adopter and get the benefits of being in front of this trend.
And at the front of trends is where quite a bit of wealth is made.
If you’re ready to start your research into cryptocurrencies, you can begin your due diligence by getting our free, no obligation Insider’s Guide to Digital IRAs. And if you want to get started right now, open your account right here (takes less than 10 minutes).
