Is the U.S. Building Strategic Bitcoin Reserves Just a Pipe Dream?

Author: Liu Jiaolian

Overnight, BTC corrected sharply, piercing through the 5-day moving average at $96.8k. It briefly dropped below $96k before rebounding and climbing back above the 5-day moving average at $97.4k this morning. It looks like a meticulously designed "hunt" aimed at wiping out the long leverage positions lurking below $96k.

Today, let's talk about the idea of the United States establishing a Strategic Bitcoin Reserve (SBR).

The concept of a strategic Bitcoin reserve was first mentioned back in July at the Bitcoin 2024 conference. According to my article from July 27, 2024, titled "Bitcoin Will Enter the Era of National Reserves," junior Kennedy stated in his speech that, if elected as U.S. President, he would sign an executive order mandating the U.S. Treasury to purchase 550 BTC daily until a reserve of 4 million BTC was accumulated, securing an unassailable global leadership position.

The following day, Trump attended the conference and expressed similar views. You can revisit my article from July 28, 2024, titled "Trump: Bitcoin Will Surpass Gold; The U.S. Must Retain 100% as a National Strategic Reserve."

As events unfolded, Trump indeed won the election. His supportive stance on the crypto industry began to influence the market, driving BTC prices upward. From around $70k on Election Day, BTC soared to nearly $100k in just 20 days.

Critics, unable to grasp the rationale, speculated wildly, claiming BTC was a U.S.-engineered scheme to exploit others or that the U.S. embracing BTC as a strategic reserve was merely an extension of financial warfare. Such opinions often reveal a lack of understanding.

I question whether these critics have truly studied Bitcoin's open-source code or its underlying system, or if they simply rely on hearsay and imagination to create sensational narratives that provoke fear, incite emotional reactions, and generate viral traffic for their platforms. After all, many of these commentators have no vested interest in BTC themselves.

For anyone familiar with basic computing principles, it's clear that Bitcoin's code is fully open source. Anyone can inspect every line of it. No hidden "backdoors" could be secretly embedded by Satoshi Nakamoto because the entire global community scrutinizes the code.

Bitcoin's consensus relies purely on voluntary adoption. Much like Rousseau's or Hobbes' theories of social contracts, which argue that states are formed by voluntary agreements, Bitcoin represents a collective, international consensus, transcending national constructs.

Even the U.S. government cannot unilaterally alter Bitcoin's rules, such as increasing its total supply. If it attempted to do so, the global community of nodes and holders could simply reject the modified code and continue using the original version. Thus, the U.S. must follow Bitcoin's inherent limit of 21 million coins and purchase them at fair market prices if it wishes to accumulate a reserve.

Some argue that using BTC as a strategic reserve to address U.S. debt sounds like a pipe dream, but history is filled with seemingly outlandish proposals. For instance, during the U.S. debt ceiling crisis in 2011, a suggestion emerged to mint a $1 trillion platinum coin to alleviate debt. While theoretically feasible under 31 USC § 5112, it was never implemented because such measures would undermine global confidence in the U.S. dollar.

However, replacing such a coin with globally recognized BTC, which is algorithmically generated and market-priced, suddenly makes the idea appear more viable.

Let’s consider a thought experiment: If the U.S. Treasury redeemed its significantly undervalued gold reserves (currently marked at $42.22/oz but worth ~$2,700/oz at market prices), it could theoretically trade them for BTC. By acquiring 7 million BTC, the U.S. could allow its value to appreciate due to scarcity and potentially use the appreciated value to offset national debt.

This conceptual framework showcases how BTC could serve as an alternative to gold in anchoring global trust in the U.S. dollar. By maintaining a high marginal price for BTC, the Federal Reserve could support its balance sheet while stabilizing the dollar’s value.

This hypothetical "swap" from gold to BTC illustrates the potential strategic value of Bitcoin, suggesting a future where it might play a key role in global monetary systems.

This article is sourced from Foresight News:

https://foresightnews.pro/article/detail/72006

AIC Team

2024/12/2