Coinbase CEO Brian Armstrong has proposed that governments worldwide should establish Bitcoin (BTC) reserves, reflecting a growing recognition of cryptocurrency as a potential global reserve asset.

He believes that the sovereign adoption of Bitcoin could significantly reshape global financial systems and central bank policies.

This proposal comes in the wake of recent U.S. developments, including former President Donald Trump's advocacy for a federal Bitcoin reserve, which Armstrong claims has 'instantly legitimized' Bitcoin.

Supporting this legitimacy, recent U.S. regulatory developments have pushed for a comprehensive crypto framework and a more business-friendly approach from the SEC.

These initiatives signify a growing global acknowledgment of Bitcoin as a legitimate sovereign asset.

In response, discussions among G20 nations and central banks are emerging regarding the integration of Bitcoin into national asset portfolios.

If G20 nations adopt similar strategies, it could institutionalize demand for Bitcoin, significantly impacting its valuation and long-term use as a reserve asset.

On-chain data indicates a shift in accumulation patterns, reflecting broader adoption and institutional confidence in Bitcoin despite ongoing market volatility.

However, the market still faces challenges, such as a negative Coinbase premium and declining open interest in Bitcoin futures, indicating cautious investor sentiment.

Following the U.S. initiative, Bitcoin's price surged to approximately $118,895, contributing to a $300 billion rally in broader financial markets, although it has recently corrected to $114,128.

This shift in Bitcoin's status may influence regulatory frameworks, promoting a structured approach to digital asset management both nationally and internationally.

The creation of a Strategic Bitcoin Reserve by the U.S. government is seen as a strong indication of confidence in digital assets, elevating Bitcoin's status among global policymakers.