Currencies
Crypto Bulls Anticipate Trump's Bitcoin Strategic Reserve
2024-11-24
Donald Trump's potential establishment of a "bitcoin strategic reserve" has sparked significant excitement within the crypto industry. Supporters believe it could offer a solution to manage the US debt, while others remain skeptical about its viability and potential impacts.
Unraveling the Crypto Dream with Trump's Bitcoin Reserve
Trump's Pledge and Its Impact on Bitcoin
Crypto bulls are eagerly awaiting Trump's fulfillment of his July pledge to create a national bitcoin stockpile. With his reentry into the White House in January, bitcoin has witnessed a series of record highs, indicating the market's optimism. Scott Mason, a senior policy advisor with expertise in blockchain and crypto, emphasizes the credibility this brings to cryptocurrency. "It's exciting as it gives a boost to the entire crypto space," he said.This potential reserve could potentially help the US offset rising debt issues in the coming years. As bitcoin's finite supply leads to a higher price, amassing a portion now could be a strategic move. Anthony Pompliano, a crypto bull, even called for the US to print $250 billion to acquire more bitcoin.The BITCOIN Act and Its Blueprint
Under Wyoming Senator Cynthia Lummis' proposed BITCOIN Act, the US aims to accumulate 1 million bitcoins over 20 years, aiming to own approximately 5% of the total supply. This act envisions bitcoin as an asset that could shore up the US dollar as the world reserve currency. "Bitcoin's appreciation since inception makes it a valuable asset for the nation," Lummis explained.However, not everyone is on board. Ananya Kumar, deputy director for the future of money at the Atlantic Council's GeoEconomics Center, questions bitcoin's role as an inflation hedge. She points out that unlike gold, bitcoin tends to track the stock market. If the US invests in a volatile asset like bitcoin, it could have downstream effects on the economy.Obstacles and Uncertainties
Despite the enthusiasm, there are several obstacles. Crypto billionaire Michael Novogratz highlights the lack of support in Congress. "While the Republicans control the Senate, they don't have 60 seats," he said, questioning the need for a reserve. Mason also emphasizes that creating a reserve through executive action may not be sufficient and requires collaboration between Congress, the Federal Reserve, and the Treasury.There are also lingering questions about public acceptance. Most of the US public does not own bitcoin, and it remains to be seen if they will favor the idea. Kumar warns that converting gold certificates and using the proceeds to buy bitcoin is an inflationary move that could require a rethinking of how the Fed works.Potential Impact on Bitcoin's Future
Novogratz predicts that the establishment of a reserve could lead to a paradigm shift, sending bitcoin to $500,000. Matt Mena, a crypto research strategist, believes it could soar to $1 million "almost overnight" as other countries rush to follow suit. However, Kumar is more cautious, noting that the importance of bitcoin as an asset for governments is still being debated.In conclusion, while the idea of a bitcoin strategic reserve holds great promise, there are many challenges and uncertainties that need to be addressed. The crypto industry will be closely watching as these developments unfold.