WOO X Research: Is the reason Bitcoin breaks 100,000 again due to U.S. state governments Coin Hoarding?

Two states have already included Bit in their reserves.

Written by: WOO

For cryptocurrency users, the most anticipated political opinion that can be implemented after Trump's election is definitely the adoption of Bitcoin as a strategic reserve in the United States, but more than three months after the election, the central government has not seen any action. In fact, in just one week, two states in the United States have officially written bitcoin into the state treasury, and another five states are in the legislative stage. Dismantling the funding sources, allocation caps, and custody models adopted by each state actually vary greatly, reflecting the different tolerances of local governments for "highly volatile, decentralized assets". This article is dismantled from a skeptical perspective, who is really arranged, who is putting on a political show, and where is the potential black swan hiding? and deduce the next step of this "official HODL" wave on market liquidity and narrative premium.

How to play in New Hampshire and Arizona?

In just 48 hours, New Hampshire and Arizona completed legislation and had it signed by the governor, marking the beginning of the year of state treasury holding currency. The paths and risk control mechanisms taken by the two states are almost in opposite directions, fully exposing the trade-offs under different political and economic goals.

New Hampshire HB 302 | Active funding, single pledge Bit, set ceiling

New Hampshire's approach is most similar to "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 that have a market value exceeding $500 billion for a continuous period of one year, with Bitcoin being the only asset that qualifies.

Legislators emphasize that the 5% cap is a safety valve: if the fiscal pool swells or shrinks, the holding limit will be adjusted accordingly to avoid a one-time heavy position. However, the provisions are vague on "whether the fund is forced to sell proportionately when the size of the fund is reduced", leaving a gray area for accounting treatment.

On custody, HB 302 provides three paths:

1. State treasury self-managed multi-signature cold wallet;
2. In escrow with a licensed Special Purpose Deposit Institution (SPDI) or other regulated bank;
3. Hold through SEC or NFA approved Bitcoin ETF

If choosing a cold wallet, self-management must meet seven technical standards, including geographical distribution, hardware isolation, and annual penetration testing, to minimize the risk of private key leakage. However, if choosing an ETF, the state treasury actually only receives a trust certificate - the transparency returns to traditional financial ledgers, which contradicts the advantages of being "visible and traceable" on-chain.

In terms of information disclosure, state treasurers must list holdings, costs, and unrealized profits and losses in financial reports on a quarterly basis; the supporting legislators verbally promised to "publish on-chain addresses" to enhance transparency, but this was not written into mandatory provisions. The provisions also completely prohibit leverage, borrowing, or collateral, intending to reduce credit risk to zero, at the cost of giving up all yield enhancement tools.

New Hampshire is following a "Treasury-level asset diversification" approach, with a small proportion, single asset, and extreme conservatism, but it has also directly tied taxpayers to the BTC price roller coaster.

Arizona HB 2749 | Passive incorporation, zero tax burden, allows Staking

Arizona views "not using a dime of tax money" as a core selling point. The new law allows the state government to transfer unclaimed crypto assets (including those with incomplete private keys but identifiable) into the newly established "Bitcoin and Digital Asset Reserve Fund" after the three-year search period has expired.

Arizona legislature. Since then, the fund can also legally receive all derived airdrops and staking rewards, forming a compound interest cycle, without needing to request additional budget from the parliament.

Even bolder is the scope of the underlying assets; the provisions have no market value or liquidity thresholds. As long as it falls into the hands of the state government, it can be included. Theoretically, everything from Bitcoin to meme coins with daily trading volumes of only tens of thousands of dollars could be integrated; the state government relies on holding a diversified portfolio to mitigate risks but also exposes itself to the high-stakes area of price manipulation in small coins.

Custody must be entrusted to a licensed compliance agency in Arizona; during this period, assets are allowed to participate in full-chain staking to earn returns. This makes the state treasury an active on-chain player for the first time, and if validators are slashed or smart contracts fail, the losses will also fall on the public sector's accounts.

In terms of liquidity scheduling, HB 2749 only allows state treasurers to convert up to 10% of non-Bit holdings into cash to subsidize general fund expenditures; the BTC portion is legislatively locked, and cannot be used unless further legislation is enacted. Information disclosure adopts a dual control of "annual report + parliamentary allocation for usage", but there is no mandatory public disclosure of on-chain addresses, resulting in lower transparency than decentralized standards.

Arizona treats BTC as "found money earning interest," leveraging Staking and airdrops to amplify idle value, cleverly avoiding taxpayer scrutiny, but also placing the state treasury on the front line of on-chain operational risks.

What should we, as investors, pay attention to?

1. Buying scale: NH, even with full positions, only amounts to 300-400 million USD, which has a limited impact on BTC liquidity; AZ's initial amount is even less than a drop in the bucket.
2. Narrative Boost: Official endorsement + "zero tax burden" story is enough to elevate short-term sentiment, but cash flow will not immediately surge.
3. Risk Control Comparison: NH uses "cap + cold wallet" to exchange for low returns; AZ uses "no-cost Staking" to exchange for high technical/contract risks. Neither of these two models is a panacea.
4. Black Swan: If BTC experiences a single-day drop of > 20%, NH may be forced to impair due to accounting evaluations; AZ will have to face Staking Slashing or custody incidents, both of which are enough to allow the opposition to overturn the case in the state legislature.

Core Differences

How are the conditions in other states?

1. The key is in Texas: If funding is successfully allocated before June 2, it will mark the first case of "large-scale public fund buying coins," and the narrative will be amplified. Conversely, if even Texas faces obstacles, it will be even harder for subsequent states to mobilize.
2. Buy orders ≠ legislation: even if the bill passes, budget appropriations still need to be decided separately; investors should continue to track appropriations bills and the public on-chain wallet addresses.
3. The differences in terms are significant: from Texas's "active funding + single collateral BTC" to Illinois's "pure donation + five-year lock-up," the risk/reward curves vary greatly, and subsequent states may choose to mix and match the best options.

Conclusion: Does the scale of buying bring substantive effects? Sentiment first speculates

New Hampshire allows the state treasury to convert up to 5% of the general/rainy day fund into Bit, with the state fiscal year budget being less than $7 billion, and even at full capacity, it would only be around $300-400 million; Arizona has even passively incorporated unclaimed crypto assets that have been dormant for more than three years, and it is difficult to even reach a hundred million in the short term. In contrast, the 24-hour spot trading volume of Bit has long maintained around $60-70 billion, and even if the state government enters the market all at once, it only accounts for less than 0.1% of the market's daily liquidity; the legislative noise is greater than the actual capital amount; price reactions are more about emotional trading rather than an imbalance in spot supply and demand.

The two state bills were signed on May 6 (NH) and May 8 (AZ); Bitcoin rose from 96 K to nearly 100 K within 48 hours, with a weekly increase of about 3%. Axios statistics show that during the same period, social media discussions related to the keyword "Bitcoin Reserve" increased by over 240% week over week. However, trading volume did not expand correspondingly, indicating a "headline rally" rather than significant spot absorption.

In addition, Glassnode pointed out that the 30-day actual annualized volatility has fallen to 45-50%, creating a low range since 2021, but the long-term historical range often exceeds 60%, which is still not comparable to traditional assets. If a Black-Swan event results in an intraday drop of > 20%, the 5% position in New Hampshire will immediately face impairment pressure, while Arizona will also have to bear the additional risks of Staking slashing or custodial contract errors.

The official HODL narrative has been "hyped up" by the market, while the real factors determining market trends are 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 it be said that the main reason for the rise in Bitcoin prices can be attributed to state strategic reserve funds.