Rumors that Trump wants to make Bitcoin the US’s strategic reserve
Bitcoin 2024 begins tomorrow in Nashville – and never before has a Bitcoin conference been so politically charged. Rumors suggest that Donald Trump could announce on Saturday that he will make Bitcoin the reserve currency of the USA.
Yes, the Bitcoin price has risen by almost 20 percent since mid-July. The market has impressively demonstrated how casually it is taking the state of Saxony’s 50,000 Bitcoin panic sale, which is pretty bullish news in itself.
But according to some American observers, all this is just smoke and mirrors. Because the big, powerful, megaton news is already in the starting blocks, and the rumors alone are enough to drive up the price.
“This is not a joke. My sources are credible.”
This week, the big Bitcoin2024 conference begins in Nashville. Along with many other prominent guests, former and possibly future US President Donald Trump will give a keynote speech there on Saturday.
“There is speculation that Trump will announce the creation of a strategic Bitcoin reserve for the United States,” writes Markus Thielen, CEO of the analysis firm 10x Research in an email to investors. “The United States could strategically integrate Bitcoin into its reserves and thus diversify its portfolio in order to reduce dependence on traditional stores of value such as gold and foreign currencies.”
The USA, Thielen continued, already held around 212,000 Bitcoins, around 15 billion dollars, which it confiscated from criminals. Unlike Saxony, where the Attorney General’s Office panicked and sold the 50,000 confiscated Bitcoins in an emergency sale, the USA has so far held onto its coins. Compared to the gold reserves of around 600 billion dollars, Bitcoins are only a small proportion, Thielen explained.
If only Thiele were speculating, we would have vague rumors from a single analyst. But he is not alone in this. Lark Davis, another analyst and author of the Wealth Mastery newsletter, asked: “Will Trump print dollars to buy bitcoins?”
Dennis Porter, a lobbyist for the Satoshi Action Fund and well-connected in the political scene, went even further. He wrote on Twitter (now X) that according to anonymous sources, Trump “will announce that he will build a strategic Bitcoin reserve.” He added: “This is not a joke. My sources are credible.” People did not believe it was possible, “but at this point it is already inevitable.”
Simon Dixon, early adopter, author and founder of BankToTheFuture, also said: “I’m getting more and more confirmation that the rumors are true. Trump will announce a strategic Bitcoin reserve in Nashville.”
And David Bailey, organizer of Bitcoin2024, tweeted that there would be a new all-time high on Saturday. He doesn’t say why, but everyone knows what he means.
If it was…
Of course, until Saturday, this is just that – a rumor. And even if Trump announces it, that doesn’t mean he’ll follow through. He’s on the campaign trail, and promising to make bitcoins a national reserve is a surefire way to win over just about all bitcoiners – while the plan can easily be delayed later and canceled for administrative or whatever reasons.
But let’s assume it was – what would it mean? First of all, no country is as good at printing money as the US. Since the dollar is in demand worldwide as an export commodity, the US government could spread the inflationary pressure around the world – while reaping the rewards itself. The rewards in this case would be bitcoins.
If Bitcoin goes up in value on that move, they’re propping up the dollar, which makes it possible to print more dollars, buy more Bitcoin, and so on. It’s a bit of a pyramid scheme – but public finance has always had that flavor.
It would make sense
Although the dollar remains the undisputed most important currency in the world, there have long been ambitions, particularly from Russia and China, to move away from the dollar.
The financial sanctions against Russia, and indirectly against China, as well as the confiscation of dollar accounts and government bonds in Russian possession, are undermining the dollar’s status as a world currency. Countries such as Saudi Arabia are already threatening to remove EU and US government bonds from their reserve basket.
The world could be heading towards a situation in which more and more countries are looking for new instruments to build up valuable reserves. Replacing US government bonds with Chinese ones makes as little sense as replacing dollars with yuan. You are simply replacing one security with a worse one, and the reserves would be more diversified – but also less stable in value.
What remains would be stocks – such as indices or ETFs, but that brings us back to the USA – or gold. But gold is not new and has probably already played out its potential as a store of value. And as a new, as yet unused store of value, Bitcoin is basically the only possible option.
In this respect, it would make political sense to move a small portion of reserves into Bitcoin now, just in case others do the same later. Whoever comes first will hold out their hand when the others start grinding too.
What is spoken becomes something more real
So even if it would make sense for the US to at least include the Bitcoins it already owns in the reserve, and even if the country, as a dollar issuer, would have ideal conditions to build up a massive Bitcoin reserve – these are rumors, and very likely nothing more than that.
“I think the odds are 10:1 against the US using Bitcoin as a strategic reserve in the next four years,” writes Ari Paul, a smart Bitcoin investor. “That said, it would still be plausible that Trump would saysand it would be very bullish for Bitcoin in the medium term.”
A purely campaign-related statement by Trump could be so bullish that it ignites the next rally – simply because it says something, and because what is said is a bit more real than what is only thought.
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