No, Trump Did Not Say Bitcoin Would be a Strategic Reserve Asset, But He’s Bullish On It

view original post

  • Trump wants all Bitcoin ($BTC) to be mined in the US, according to his Truth Social post. 
  • $BTC advocates speculate it could become a strategic reserve asset if Trump wins the elections. 
  • $BTC makes for a poor strategic reserve due to volatility and extreme scarcity, yet Trump’s pro-crypto stance is apparent. 

Last month, Trump declared on Truth Social (his own social media platform) that he wanted all remaining $BTC to be mined in the USA. He also recognized $BTC’s geopolitical significance and emphasized it would help the US become energy-dominant.

Trump’s bold statement sparked speculations about $BTC potentially becoming a strategic reserve asset. Alex Thorn, head of research at Galaxy Digital, notes that $BTC is one of the scarcest commodities on our planet and strongly supports the idea. 

However, is this what Trump really implied? Likely not, and here’s why. 

Why $BTC Isn’t a Viable Strategic Reserve Asset  

To debunk the common misinterpretation of Trump’s words, we should first understand a ‘strategic reserve asset.’ 

A strategic reserve asset is a financial asset held by a central bank that serves strategic purposes beyond immediate expenses. For example, it may maintain exchange rate stability or increase liquidity during an economic downturn.

Currently, the US holds strategic reserve assets in dollars, major foreign currencies (like euro and Japanese yen), gold, and special drawing rights (SDRs). 

Typically, strategic reserve assets are readily available for use (liquid) and abundant. SDRs and gold have a limited supply, but are included in the federal reserve for diversification and stability. 

$BTC is none of that. It’s very scale and volatile.

Moreover, converting it into a large amount of cash isn’t easy. If the Federal Reserve (FED) tried selling billions of dollars worth of $BTC at once, it would dump the coin’s price and potentially impact the entire crypto market. 

According to the FED’s latest data, the US now holds over $243T in strategic reserves:

  • Gold: $11.041T
  • SDRs: $167.026T
  • Reserve position in International Monetary Fund: $29.231T
  • Foreign currencies: $35.316T 

Meanwhile, known US $BTC reserves are worth approximately $13.6B, accounting for 2.7% of the total $BTC supply. 

That’s more than the UK, Germany, and El Salvador’s reserves combined, given that $BTC is a legal tender in the latter. Still, even if the FED bought the entire $BTC market cap, it would barely exceed $1T

Source: Yahoo Finance

For now, $BTC seems better suited for buying neat gadgets, like Teslas, or VPN subscriptions than propping up national economies. In the long term, $BTC could become a more stable asset comparable to gold or real estate, but the adoption is not there yet.

Crypto As a Leverage to Win Elections?

Although $BTC is a long way from becoming a strategic reserve asset, Trump is apparently bullish on crypto. Recently, he promised to be the ‘crypto president’ at a Craft Ventures fundraising event. 

Trump also started accepting crypto donations for his presidential campaign fundraising, accumulating over $30M worth of meme coins in a few weeks. 

While Trump displays a firm pro-crypto stance, he claims Joe Biden ‘wants crypto to die a slow and painful death.’ 

Biden hasn’t officially proclaimed a war on crypto, but actions speak louder than words. In June 2024, he vetoed the SAB 121 repeal, ‘a slap in the face to innovation and financial freedom,’ according to Cody Carbone.

Earlier this year, Senator Cynthia Lummis criticized Biden’s regulations for threatening to criminalize $BTC software development in the US. 

Moreover, under Biden’s Administration, the SEC has repeatedly pursued crypto firms like Binance and Ripple in what Binance’s representative called a ‘politically driven overreach.’

Final Thoughts 

Crypto has become one of the core debate issues, and Trump is seemingly trying to secure the crypto community’s votes. Will this leverage be sufficient for Trump to win or will Biden’s conservative approach prevail? 

We’ll have to wait and see. 

References

Click to expand and view references

Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.

Our Editorial Process

The Tech Report editorial policy is centered on providing helpful, accurate content that offers real value to our readers. We only work with experienced writers who have specific knowledge in the topics they cover, including latest developments in technology, online privacy, cryptocurrencies, software, and more. Our editorial policy ensures that each topic is researched and curated by our in-house editors. We maintain rigorous journalistic standards, and every article is 100% written by real authors.