A governance proposal within the Polkadot community to convert 500,000 DOT tokens into Threshold Bitcoin (tBTC) has sparked mixed reactions, with the goal of enhancing diversification and ensuring long-term stability.
Supporters view Bitcoin as a reliable hedge against market volatility, but critics question the timing of the move, given BTC’s current peak prices.
The proposal, introduced in early June by pseudonymous community member hippiestank, suggests establishing a Bitcoin strategic reserve over the next year. If approved, the plan would involve selling 500,000 DOT and reinvesting the proceeds into BTC through a dollar-cost averaging (DCA) approach.
Threshold BTC (tBTC) is a non-custodial solution that leverages threshold-Elliptic Curve Digital Signature Algorithm (ECDSA) wallets, offering Polkadot a way to maintain decentralization, liquidity, and transparency in its Bitcoin holdings.
Preparing for Future Market Volatility
During the forum discussion, several Polkadot community members acknowledged DOT’s weak price performance in 2025 and suggested that establishing a Bitcoin reserve could help mitigate the impact of the ongoing decline.
However, some raised concerns about the timing, noting that DOT is currently trading near its lows while Bitcoin remains strong above $100,000. In response, the proposal argued:
“I believe the ‘DOT ATL, BTC ATH’ argument misframes the situation. This proposal is about risk management and operational continuity, not market timing or speculation.”
The proposer also cautioned that waiting for the “perfect” timing could prevent Polkadot from ever achieving meaningful diversification. Moreover, there was broader community interest in exploring diversification across multiple asset classes, rather than relying solely on Bitcoin.
Evaluating the Advantages of a Bitcoin Strategic Reserve
Skeptics called for more clarity on the proposal.
“I just don’t see how we can do this in a way that truly adds value, either in the short or long term,” one community member commented. “Even with strong yields, it’s likely to cause more harm than good by adding downward pressure to DOT’s price—something we’re already dealing with due to other DCA strategies and declining interest.”
The member also encouraged the proposer to broaden the discussion by engaging more voices on X before reaching a final decision:
As discussions continue, the final decision on creating a diversified strategic reserve will rest with a community vote.
Recently, the Polkadot community approved the launch of a Polkadot-branded non-custodial payment card, compatible with any service that accepts Visa.
