Bitcoin’s strategic reserve has crypto bulls excited for Trump’s second term

• Cryptocurrency bulls are looking forward to seeing Trump create a “Bitcoin Strategic Reserve.”
• Supporters say the United States could manage its debt if it bought and held bitcoin now.
• However, sources tell BI that they expect obstacles to achieving the reserve.

The rise of Donald Trump as the firstHead encoder“The industry has stirred in anticipation of a golden age for cryptocurrencies.

Among a host of changes to come, cryptocurrency enthusiasts are particularly looking forward to seeing Trump fulfill the pledge he made in July to create a digital currency. National bitcoin stock.

With Trump now poised to return to the White House in January, that promise helped deliver Bitcoin to a series of record highs, with little sign of any impending rise Slow down.

“I think it’s exciting in the sense that it definitely lends credibility to cryptocurrencies and bitcoin,” Scott Mason, a senior policy advisor at Holland & Knight with expertise in blockchain and cryptocurrencies, told Business Insider.

What will Bitcoin reserves do?

In the same week that Trump pledged to create a national stockpile, Wyoming Senator Cynthia Lummis laid out the master plan for what one could look like.

Under the so-called Bitcoin lawthe United States will accumulate 1 million Bitcoins over 20 years, with the goal of owning approximately 5% of the total supply.

“Bitcoin has risen in value since its inception. She explained on Thursday that this would be an asset that could help support the US dollar as the global reserve currency, and serve as a reserve that could be used to significantly reduce the national debt.

The industry is excited about the idea. Assuming the limited supply of the coin causes the price to rise, accumulating a portion of Bitcoin today could allow the US to offset the rise Debt issues In the coming years.

It is also assumed that the rise in the value of Bitcoin will offset the weakness of the dollar in the event of another bout of inflation.

“This is the kind of action that will cost us very little financially, but could have a profound impact on our future financial health,” Anthony Pompliano, a crypto proponent, wrote in a post. Share LinkedIn. Calls on the US to print $250 billion to collect more Bitcoin.

However, not everyone is convinced.

Ananya Kumar, deputy director for the Future of Money at the Atlantic Council’s Center for Geoeconomics, is unsure about Bitcoin’s role as an inflation hedge. Unlike gold, she said the currency still tends to track the stock market.

She told the BBC: If the United States invests in volatile assets, it risks impacts on the economy.

Under Senator Lummis’ proposal, the United States would convert gold certificates held by the Federal Reserve to today’s fair market value before selling them and Using the proceeds to buy Bitcoin.

That’s not unimportant, Kumar said: “It’s incredibly inflationary, and you’re going to have to rethink how the Fed operates. You’re kind of adding a timing element to all of this.”

Other questions remain, such as whether the general public in the United States – most of whom do not own Bitcoin – would like the idea.

Whatever the obstacles, investors are largely optimistic that the reserve will arrive next year. According to the betting market everythingThere is a 64% chance that this will happen before 2026.

But it may all depend on Congress, where support appears to be lacking at the moment, said cryptocurrency billionaire Michael Novogratz.

“While Republicans control the Senate, they do not have 60 seats,” the Galaxy founder said. Bloomberg TVWhile he doubted the necessity of having a reserve.

For those who hope the next administration can create the reserve through executive action, that will require guardrails that may be too large for a presidential order to handle, Mason said.

“Who controls the balance? Who controls the ability to buy and sell?” He told Business Insider.

Congress will eventually have to cooperate with the Fed and the Treasury, and it may take some time for that to happen. Both Kumar and Mason said they don’t expect Capitol Hill to prioritize the reserve. Even regarding cryptocurrency legislation, other bills will likely come first.

What will happen to Bitcoin?

Novogratz predicted that the event would be a paradigm shift that would send Bitcoin to $500,000. His predictions are based on the idea that other countries will feel pressure to follow suit and create their own Bitcoin reserves.

The same theory is why Matt Mina, a cryptocurrency research strategist at 21Shares, previously told BI that Bitcoin could rise to… 1 million dollars “Almost overnight.”

“Such a move would send other countries rushing to compete with the United States and its neighbors, stimulating global competition to build reserves,” he said via email. “In this scenario, Bitcoin’s total market capitalization could easily exceed gold.”

Kumar does not expect the impact of the reserve to be that direct. Cryptocurrency bulls might take an example of this from the fact that countries tend to have oil reserves, and the price of oil can be affected when this happens. Adding to or reducing its stock.

However, the difference is that oil is of strategic importance during major supply disruptions, while the importance of Bitcoin as an asset held by governments is still under debate.

This story was originally published in November 2024.