France Is Considering a Bitcoin Reserve. Here's Why That's Extremely Bullish.

When a country changes which assets it holds in reserve on its central bank's balance sheet, markets notice, and with good reason. Similarly, when a major economy even flirts with the idea of treating a scarce asset such as Bitcoin (CRYPTO: BTC) like it's on the same level as actual bars of gold, investors should perk up, especially if they hold some of the asset in question.

Today, France is considering just such a move. A proposal before the National Assembly would establish a national Bitcoin reserve, retain coins obtained via seizures, and even explore publicly supported mining, all with a goal of acquiring roughly 2% of all Bitcoin during the eight years after the proposal's expected adoption. If any recognizable version of it passes, supply of Bitcoin would tighten in a hurry, and the policy signal could ripple far beyond Paris, so let's explore why this is such a bullish development in a bit more detail.

A new Bitcoin reserve would soak up supply, and fast

In its current form, the bill before the National Assembly sketches out the formation of an "administrative public establishment" to manage a strategic Bitcoin reserve, targeting ownership of about 420,000 coins (or about 2% of the 21 million that can ever exist), which is to be accumulated during the next seven or eight years.

The state would also be mandated to retain any coins seized in legal actions, rather than auctioning them off as it does now. Surprisingly, the proposal additionally contemplates using surplus nuclear and hydropower for a public mining effort, through a five‑year pilot program, which lawmakers floated this summer. One other interesting wrinkle is that the policy would let people pay their taxes in Bitcoin as well as with stablecoins.

But for holders, what does it mean in practice if France buys 2% of Bitcoin's supply?

Bitcoin's supply is hard‑capped at 21 million, with roughly 95% already issued, and its halving means that the rate at which new supply is produced will keep falling over time. For scale, a national reserve holding 2% of the supply would sit in the same league as the world's largest corporate treasury holder. Strategy (formerly known as MicroStrategy) reports holdings more than 640,808 coins today, near 3% of the circulating supply, so it's no surprise that its purchasing and hoarding activity are regularly credited with being one of the more important drivers of Bitcoin's price.

At a recent Bitcoin price of about $110,000, the proposal's aspiration implies a notional value of near $44 billion, with purchases spread over years and potentially partially self‑funded by asset seizures and public mining. That means it could be persistent pressure on supply that forces up the coin's price for quite some time.

This supports the coin's core investment thesis

In crypto, an asset's float matters as much or even more than its total possible supply, as it's the number of coins actually for sale that set the price. France won't be the only sovereign buyer by the time the policy under consideration could be put into effect and its purchases could begin.

Furthermore, an official Bitcoin reserve in a major E.U. member would likely catalyze policy diffusion across the region, at least to an extent. If Paris formally treats Bitcoin as "national digital gold," as called for in the proposal, expect more inflows as a new crop of financial institutions normalize the asset. That sequence reinforces the long‑term investment thesis, where Bitcoin's fixed supply, rising institutional demand, and widening sovereign sponsorship support higher and higher prices.

However, investors need to keep their hopes grounded here.

The odds of the French national assembly adopting the bill exactly as it's written are very low. The fact of the matter is that the political party proposing the reserve only holds 16 seats out of the legislative body's total of 577 members. So don't hold your breath for the purchases to start forcing the coin's price up anytime soon.

Separately, the promising Bitcoin mining pilot program hinges on power generation economics that can easily swing with the tides of the energy markets, which themselves are affected by a plethora of macroeconomic factors that are in flux in the E.U. at the moment.

For investors, the right move here is to assume that even if France's Bitcoin reserve doesn't ever play out, some version of the reserve concept will still advance in France or elsewhere, so expect a tighter float and higher prices over time. Set up dollar-cost averaging (DCAing) to gradually accumulate the coin over time, and you will be positioned for any new sovereign accumulation policies as they occur.

Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.