You won’t believe what Michael Saylor just said about Bitcoin

There is no denying that cryptocurrency is a polarizing asset class. Although it is starting to gain a certain level of interest at the institutional level, I bet that the majority of crypto enthusiasm is still found among retail investors.

Given this dynamic, it can be a big deal when a prominent figure makes a comment about cryptocurrencies – whether positive or negative. During the past two years, Accurate strategy chief executive officer Michael Saylor He has emerged as one of the biggest supporters of the cryptocurrency world. In particular, the tech mogul is fascinated by him Bitcoin (Bitcoin -1.07%).

On December 16, Saylor sat down for an interview with CNBC’s Sarah Eisen, telling the anchor that he believed President-elect Donald Trump was serious about creating a new government. Bitcoin Strategic Reserve. Just one day after Saylor’s comments, the price of Bitcoin soared to new heights, reaching more than $108,000.

Below, I’ll explain the reasons why a Bitcoin reserve makes sense, the mechanics of how such a reserve is built, and what this might mean for Bitcoin investors.

Why might a Bitcoin Strategic Reserve make sense?

Currency is a difficult thing. Whether it is the US dollar, the euro or the Chinese yuan, the values ​​of different currencies are constantly moving. But unlike the volatility of stocks, differences in currencies relative to each other can carry some weight when it comes to trading, borrowing, and more.

Over the past few years, inflation has reached its highest levels in four decades, prompting the Federal Reserve to raise interest rates 11 times in an attempt to curb rising prices for goods and services. Given the inflationary pressures on the US dollar, the consumer Purchasing power Significantly contracted.

During times of economic uncertainty, it is not uncommon for investors to either hoard cash or pour into alternative assets such as cryptocurrencies. Moreover, given The fixed supply of Bitcoin is 21 million coinsAdding some cryptocurrencies to the US balance sheet could serve as a hedge against inflationary pressures on… Paper currency (such as the US dollar) while also adding an extra layer of diversification.

How to build a Bitcoin reserve

While President-elect Trump and some of his aides, such as Robert F. kennedy jr and Elon Musk have been outspoken supporters of Bitcoin and cryptocurrencies in the past, and a lot of changes will need to be made through… A regulatory perspective before the United States can begin building a strategic reserve of Bitcoin. In essence, Congress would need to pass a specific budget or amend existing legislation that would allow the US Treasury to begin acquiring Bitcoin.

Furthermore, given the lack of a legal structure surrounding Bitcoin and cryptocurrencies in general, the Treasury Department will need to work with the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Internal Revenue Service (IRS) to build a more compatible framework. Regarding how to classify Bitcoin, and determining whether it qualifies as a reserve asset on the US balance sheet.

Bottom line

In my view, building a Bitcoin reserve is more of a pipe dream than a realistic scenario at the moment.

Although I understand the theoretical benefits of storing Bitcoin, it is essential to remember that cryptocurrency prices tend to experience significant fluctuations compared to traditional assets. For this reason, Congress may feel that allocating a portion of the budget (taxpayer dollars) to speculative assets is irresponsible.

I think the idea of ​​a Bitcoin reserve is just an idea. It’s interesting, but I think it’s unlikely to happen anytime soon — even with a pro-crypto administration arriving in Washington in about two months.

I would encourage those interested in investing in cryptocurrencies or Bitcoin to consider Bitcoin exchange-traded funds (ETFs)or brokerage companies that allow cryptocurrency trading, such as Coinbase or Robinhood.