The 2024 US election turned out to be a pivotal moment for the cryptocurrency world, especially with Donald Trump’s reelection. His return to the White House breathed new life into Bitcoin and revitalized the entire crypto market following a sluggish performance in the year’s second and third quarters.
President-elect Trump had made a bold campaign promise: the creation of a strategic Bitcoin reserve. This idea has sparked much discussion in crypto circles, focusing on how such a reserve might influence both the US economy and the broader crypto ecosystem.
The Rationale for a US Strategic Bitcoin Reserve
Ki Young Ju, CEO and founder of CryptoQuant, recently shared his thoughts on the United States establishing a Bitcoin reserve. Posting on the platform X, he suggested that leveraging the world’s largest cryptocurrency to manage the US debt could be a viable strategy.
He explained, “Over the past 15 years, Bitcoin has seen $790 billion in capital flows, which pushed its market cap to an impressive $2 trillion. Just this year, $352 billion has been funneled in, boosting its market cap by another $1 trillion.”
Young Ju further revealed that the US might reduce its domestic debt—which accounts for 70% of the total—by 36% if it secures 1 million BTC by 2050 and designates it as a strategic asset. He noted that, while the remaining 30% of debt held by foreign creditors might not align with this strategy, the plan doesn’t depend on Bitcoin settling all debts, thus making it a sound maneuver.
Ju also acknowledged that using a dynamic asset like Bitcoin to counterbalance dollar-based debts might face hurdles, particularly in creditor acceptance. However, should the US choose to establish a Bitcoin reserve, it might set a global precedent for legitimizing this digital asset, akin to gold.
He pointed out in his X post that one risk of creating such a reserve could be old Bitcoin holders selling off to undermine US governmental intentions. Nonetheless, he noted that if governments persist in acquiring Bitcoin up through 2050 and its value continues to climb, significant sell-offs seem unlikely.
A Quick Look at BTC’s Current Price
Currently, Bitcoin is priced at approximately $97,000, reflecting a slight dip of 0.4% in the last 24 hours, as per CoinGecko’s data. Over the past week, its value has decreased by 3.6%.
Image featured from iStock, chart sourced from TradingView.
