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Earlier this month, President Trump reinvigorated the crypto market with the announcement of five cryptocurrencies in the US strategic reserve: Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Solana (SOL) and Cardano (ADA). In making this announcement, Trump opened the door to a new financial era, creating an opportunity for Bitcoin and other cryptocurrencies to go to toe with the global reserve fiat currency, the US dollar.
How did Bitcoin arrive here? The Bitcoin Revolution began and grew as a reactionary move to another global financial event. This is the 2008 financial crisis driven by an unsustainable housing bubble supported by inadequate lending practices and toxic assets. Interventions that the central bank has made to fix the problem – including the “too big to fail” institutional relief – has formulated what Bitcoin white paper writers and “inventor” Nakamoto at which they have long believed in the fundamental problems of already centralized economics and the need for a state-specific “e-cash.” The Bitcoin blockchain itself went live when Sato embed the following message in Genesis Block:
“Times 03/January 3, 2009 The Bank Prime Minister is on the verge of a second bailout for the bank.”
In particular, if Bitcoin appears to be strong enough to become something like digital gold or a global reserve currency, the current era may be even more auspicious to drive a second wave of the Bitcoin revolution. The problem presented by the present era is not a bailout, but a fundamental problem with the Fiat currency itself, the inflation of its stickiness.
In countries that are more prone to centralized currency manipulation and are still drowning in Fiat released during and after the Covid-19 crisis, inflation has proven to be the fundamental complexity that has plagued leaders and political spheres around the world. Even if many political incumbents in various countries are defeated by the problems, inflation has proven particularly resilient, even for many disruptors caught up in anti-inflammatory, anti-transport sentiments.
In some cases, the issue is separated into several products and sectors that face unique and possibly temporary supply challenges, such as when it comes to egg prices. However, if the problem persists, cryptographic protected areas, particularly Bitcoin Reserve, could present an elegant solution that at least partially stops inflation. This is good for these governments as well as for the evolution of truly free and fair digital currency that have been with us since 2009.
Does the US Bitcoin Reserve actually work?
Is this also feasible, especially here in the US?
In general, Bitcoin-led reserves offer hedges against inflation. The downside is that it loses the flexibility around these holdings of conventional Fiat-driven toolkits that help governments heat or cool the economy when needed.
It makes sense that the government considers Bitcoin part of its reserve. In particular, we see it as the highly rewarded portion of the reserve, especially as a small, high-risk, high-reward portion, despite the government’s missed to $100,000 in its first March. There are other rewards too. As Sen. Cynthia Ramis pointed out to Elon Musk, now a top advisor to President Donald Trump, crypto-protected sanctions could be an automatic solution for the government to digitally audit their preparations with better audits.
The US state governments are actually leading the way in this issue, providing a kind of roadmap for federal governments to use. Almost half of all state governments have put money in their crypto reserves or have started the process. If Bitcoin continues to grow through this increased demand for fixed supply, it becomes an even more attractive option for the US federal government and other governments.
If Bitcoin is truly part of the US national reserve, there must be a clear regulatory framework, robust custody solutions, and bipartisan political will. From a monetary policy perspective, the Federal Reserve could potentially change the way interest rates and national debts are managed, facing assets that cannot be directly manipulated.
Enter while you get it
But what does all these governments do for Bitcoin itself? We have already seen temporary price increases in the news itself alone, but the actual impact of being implemented will be more broad.
For one, Bitcoin will soon be linked to the basic path of public investment, particularly retirement benefits and pension funds. It is true attention and institutional interest that goes beyond online bulletin boards, telegrams and the Robinhood app.
Following the US lead, the US federal government will create a ripple effect of large private sector businesses following public sector leads. If Bitcoin belongs to the National Reserve, it justifies Bitcoin as a facility-grade asset, urging businesses to hold it more confidently on their balance sheets. In reality, new mainstream liquidity strategies are seen, such as crypto-assisted lending, and companies are more aggressively integrating Bitcoin into long-term capital plans.
If Bitcoin is considered a national reserve, its reliability as collateral will also skyrocket. Bitcoin-backed loans become as standard as borrowing against gold, adding a modern dimension to liquidity in times of crisis. Its digitality provides a global 24/7 market. This can provide flexibility and speed that the Money and Treasury cannot match, but volatility is still a consideration.
The nationwide BTC reserve solidifies Bitcoin’s status as “digital gold.” We will see a wide range of acceptance of BTC’s collaborative loans, credit facilities and financial management solutions from banks and alternative lenders. New financial tools such as Bitcoin-based municipal bonds and sovereign BTC ETFs could also become viable.
There are still risks that include price volatility, but it could be profitable rather than a bug, especially when incorporated as a segment of a diverse portfolio with different risk thresholds. Policymakers need to balance both perceived and genuine concerns.
Conversely, Bitcoin offers an uncorrelated hedge against inflation and can attract global capital if the US is considered Bitcoin-friendly and truly positions it as the world’s best reserve asset. While Bitcoin is still relatively low and invest-friendly, it is striving for the federal government to follow President Trump’s lead and begin to seriously explore this option.
