The digital assets section of the renowned Forbes Magazine published an article yesterday that deals with the topic of Bitcoin as a reserve asset for the US. The article was prompted by the increasing number of statements from US politicians regarding the strategic positioning of Bitcoin in the world's most relevant economy, which have triggered speculation in this regard.
The article entitled "Trump sparks talks about Bitcoin as a strategic reserve asset" shows that Bitcoin has arrived in the mainstream and that even discussions about hedging the global currency with the 15-year-old asset have become socially acceptable.
High-ranking US politicians want to strategically back Bitcoin
At the beginning of the article, the author refers to statements made by the next US president, who is currently likely to be the next president according to the betting markets. Donald Trump recently emphasized that the United States must open up to Bitcoin in order to avoid falling behind China or Russia. The ex-president made this statement in the famous post on the Truth Social platform, in which he also expressed the wish that all Bitcoin in the USA should be mined in future - Blocktrainer.de reported.
Vivek Ramaswamy is another example of how high-ranking politicians are increasingly looking to use Bitcoin strategically. The Republican ran for president himself, but has been supporting his party colleague Donald Trump for several months. According to Forbes, the 38-year-old former biotech entrepreneur has been advising presidential candidate Trump on digital assets since he withdrew his candidacy in January. This is particularly exciting as Ramaswany himself suggested towards the end of his candidacy that the US dollar should be backed by a basket of commodities - a mix that would eventually include Bitcoin.
Another presidential candidate who advocated something similar and is cited in the Forbes article is Robert F. Kennedy Jr. He is still in the race as an independent candidate, but has virtually no chance of winning. As part of his election campaign, Kennedy proposed covering US government bonds with gold, silver, platinum and Bitcoin - Blocktrainer.de reported.
Kennedy's and Ramaswamy's plans were aimed at curbing inflation and counteracting the loss of purchasing power of the US dollar. Trump, on the other hand, has not yet made any public statements in this regard, even though the CEO of Bitcoin Magazine, who is supporting Trump in his election campaign, has claimed that the ex-president asked him whether Bitcoin could be used to tackle the US national debt problem. Nonetheless, his goal at the moment seems to be simply to keep the Bitcoin and crypto industry in the US and profit economically as a result.
In addition, there is another influential person who is probably the most Bitcoin-friendly of those already mentioned. Republican Senator Cynthia Lummis has positioned herself as a proponent of Bitcoin for years and has advocated using Bitcoin to improve government finances. In early 2022, she also proposed that the US Federal Reserve diversify its foreign currency reserves with Bitcoin.
Asked by Forbes about Bitcoin as a strategic reserve for the US, Lummis emphasized that she is quite taken with the idea.
Bitcoin is an incredible store of value, and I can certainly see the benefits of our country diversifying its investments.
CynthiaLummis
How Bitcoin can become the reserve asset of the USA
To find out how the US can utilize Bitcoin as a reserve asset, the author of Forbes spoke to Alex Thorn, head of research at crypto company Galaxy Digital. Thorn also believes that the idea of strategically backing BTC makes sense and that nations will increasingly join the Bitcoin network in the future. According to Thorn, as with any scarce commodity, countries will compete to own as much of it as possible.
As a globally decentralized commodity with solid properties, Bitcoin will undoubtedly play a growing role in geopolitics and international trade.
Alex Thron
Although the US does not appear to have an actual Bitcoin strategy yet, Forbes explains that it is already the nation with the most Bitcoin holdings, leading the "digital gold rush". In addition, the US is home to the most Bitcoiners, contributes the largest share of Bitcoin mining and is the country with the most Bitcoin nodes, i.e. network nodes. Furthermore, should Donald Trump win the presidential election in November, the US would have the first "pro-Bitcoin president".
The article implies that the US could become the "MicroStrategy of nation states". MicroStrategy is the first public company to bet on Bitcoin and, with over 226,000 BTC, clearly tops the list of companies with Bitcoin holdings. The company, founded by Michael Saylor, has benefited significantly from this bold move.
The game theory behind Bitcoin
El Salvador is already a country that is strategically backing Bitcoin and actively building up its own stocks. Alex Thorn explains to Forbes that this could force other countries to follow the Central American country's lead.
Simple game theory says that adoption by one nation will result in other nations considering doing the same, whether friend or foe.
Alex Thorn
The author then explains how the United States, as the world's most relevant economy, could benefit from this move, which would take Bitcoin adoption to a new level.
This game theory would only accelerate if the United States - the richest nation in the world and the home of global capital - became the first developed country to begin accumulating Bitcoin as a strategic reserve. This decision would accelerate the global adoption of Bitcoin as a long-term savings vehicle and a form of digital gold. In this scenario, the United States would gain the most among OECD countries due to its first-mover advantage.
From the article
The Forbes article also features Matthew Pines from the Bitcoin Policy Institute, a non-partisan US think tank. Pines goes on to cite the advantage that a Bitcoin strategy "could position the United States well against authoritarian challengers (who may be considering their own hard asset diversification and hedging strategies) while signaling that they intend to lead the emerging open digital financial networks."
By this, Pines means that while China and other BRICS nations are currently flirting with gold as a precious metal, the US could be betting on Bitcoin as the more promising reserve asset of the coming age to counteract the loss of confidence in the US dollar.
Discussion about Bitcoin as a reserve asset moves into the mainstream
The latest article from Forbes Digital Assets shows that speculation about a hedge for the US dollar and a Bitcoin strategy for the US is now increasingly moving to the center of society. This is particularly due to the fact that there are increasingly influential US politicians - probably even a US president in a few months' time - who are speaking out in favor of the asset and a friendly US position towards it. There are even direct calls to support the US dollar with Bitcoin from presumed future Vice President Ramaswamy and Senator Lummis.
Finally, the article concludes that the US could only benefit from strengthening the national balance sheet with Bitcoin, as this would increase confidence in US government bonds, i.e. the basis of the US dollar, as well as the economic strength of the US.
A solid balance sheet strengthened by Bitcoin in the early stages of adoption by nation states would only improve the resilience of the U.S. economy. And a stronger economy would only increase confidence in U.S. Treasury bonds, which are backed by the "full faith and credit" of the U.S. government. With this strategy, policymakers could therefore be laying the groundwork for an unexpected future - a future in which Bitcoin and the dollar grow together.
From the article
The author lists many arguments that could further fuel speculation that the US will strategically rely on Bitcoin in the future to support its own currency - and not to replace the US dollar.
Of course, there are also points that speak against this at the moment. Potential obstacles cited in the article include regulatory hurdles, political headwinds within the US and uncertainty in the US government bond market, which this unconventional move could entail.
Whether the US will actually build up strategic Bitcoin positions sooner or later remains to be seen. If the US does so, it is highly unlikely that it will communicate this in advance, as such an announcement would already drive the price of Bitcoin to unprecedented heights.
