Article author: Visit blockchain
Source: Visiting the blockchain
Bitcoin surged and then fell back. After rising above $93,000 yesterday, it quickly fell back by $5,000, and then quickly rose back to above $90,000. The latest price is $91,149 per coin. The biggest reason why the mainstream speculates that Bitcoin is expected to break through $200,000 is that it has entered a new narrative stage. After the positioning of digital gold is gradually recognized by mainstream financial institutions, Bitcoin is becoming an important asset category: a national strategic reserve asset.
On November 10, (Bitcoin) Magazine CEO David Bailey said on his social platform, "At least one sovereign nation is actively acquiring Bitcoin and has become one of the top five holders. I hope we will hear from them soon."
Currently, governments of sovereign states around the world, including China, the United States, and Russia, are involved in holding Bitcoin.
The United States: First, the U.S. government does hold a large amount of Bitcoin, and these assets mainly come from confiscation and seizure actions by law enforcement agencies. According to the latest data, the U.S. government holds an estimated 200,000 Bitcoins, and the value of these Bitcoins fluctuates with the market, currently about $5 billion to $12 billion.
Moreover, Trump stated at the Bitcoin Conference on July 28 that if elected in November, he would fire Gary Gensler, Chairman of the U.S. SEC, prevent the U.S. from selling its Bitcoin holdings, and establish a "strategic Bitcoin reserve."
Russia is involved in Bitcoin because the sanctions it has been subject to have limited its access to the global financial system. After being sanctioned by the United States, Russia began to actively explore alternatives to cross-border trade that bypass the SWIFT system, with Bitcoin becoming an important tool. In 2024, Russian President Vladimir Putin signed a law that officially legalized Bitcoin mining, emphasizing the use of Russia's abundant energy resources to support the Bitcoin mining industry, a move that could provide a stable source of Bitcoin for national reserves and trade needs.
These actions show that Russia is using Bitcoin and other digital assets as a means to deal with sanctions and enhance financial autonomy. According to Bloomberg Terminal information on October 23, as the BRICS summit opened in Kazan, Russia, the issue of cryptocurrency was put on the agenda. Russian lawmakers are promoting the idea that Russian miners can sell their tokens to international buyers, and domestic buyers can use BitMarket and other crypto markets to pay for imported goods, effectively bypassing Western sanctions.
China mainly involves Bitcoin at the judicial level. In many cases involving freezing and confiscation of virtual currency assets, law enforcement agencies have repeatedly conducted investigations into illegal funds and money laundering, including freezing and confiscation of Bitcoin. These confiscated Bitcoins were confiscated by the relevant departments. Although there has never been a public record, there are signs in some judicial cases that government departments need to hold encrypted assets under certain circumstances.
The first two countries to take the plunge were El Salvador and Bhutan.
El Salvador began purchasing Bitcoin in 2021. According to The Bitcoin Office in El Salvador, El Salvador is still purchasing 1 BTC per day. Its current Bitcoin holdings have reached 5,929.7 BTC, with a market value of approximately US$470 million.
Another mysterious sovereign state is Bhutan, located in the Himalayas. Its national investment institution, Druk Holdings, has been mining Bitcoin through hydropower resources since 2019. With a population of only 800,000, it owns more than 12,000 Bitcoins. This small country located in the southern foothills of the Himalayas has attracted global attention with its bold Bitcoin betting strategy.
The holding scale exceeds 1.1 billion US dollars. Bhutan has been involved in Bitcoin mining for many years. It is rapidly accumulating wealth through Bitcoin mining business and becoming an important player in the crypto market. According to Arkham data, the Bhutanese government mines through multiple mining pools such as AntPool, Braiins and Foundry. As of November 13, the Royal Government of Bhutan holds 12,576 Bitcoins, worth more than 1.1 billion US dollars. In terms of the known scale of government holdings, Bhutan is the fourth largest holder after the United States, China and the United Kingdom.
This holding is quite astonishing. If calculated based on Bhutan's GDP of $2.89 billion in 2022, the value of its Bitcoin holdings is more than one-third of the country's GDP. In contrast, for example, El Salvador (population 6.4 million) holds $500 million in Bitcoin, which accounts for less than 1.5% of its 2023 GDP of $34.02 billion.
Unlike most governments that obtain Bitcoin through asset seizure and other methods, Bhutan’s Bitcoin comes from its active participation in Bitcoin mining. As previously reported, Bhutan has one of the largest hydropower and water reserves in the world, creating a unique and significant advantage for its participation in Bitcoin mining. Bhutan is an "early entrant" and has been vigorously deploying Bitcoin mining for several years. Its government representative once revealed that Bhutan started mining Bitcoin "a few years ago as one of the early entrants when the price of Bitcoin was about US$5,000." currency.
In 2023, Bhutan's investment arm Druk Holding & Investments teamed up with listed mining company BitDeer to launch a $500 million crypto mining fund, with the goal of using Bhutan's abundant hydropower to build a zero-carbon crypto mining base. The construction of the mining data center is expected to be completed in the third quarter of 2024. Ujjwal Deep Dahal, CEO of Druk Holding & Investments, also explained that mining is the least risky way for Bhutan to participate in the crypto field, and the country will currently focus on Bitcoin mining.
The on-chain data also confirms this. Arkham tracking data shows that Bhutan has been involved in the crypto field since at least February 2021. At that time, Bhutan received its first Bitcoin from AntPool, which was 0.0267 BTC, worth about $1,280 at the time. This may also be Bhutan’s first foray into Bitcoin mining. Since then, Bhutan has begun to regularly transfer some Bitcoin to exchanges, especially since the second half of last year, when Bhutan deposited hundreds or even thousands of Bitcoins into trading platforms almost every month.
In addition to mining, Bhutan has also conducted large-scale financial transactions with multiple crypto platforms. According to public data, the total amount of crypto transactions between Bhutan and BlockFi, Celsius, Hodlnaut and other cryptocurrencies exceeded US$800 million, covering a variety of crypto assets such as Bitcoin, Ethereum and stablecoins.
Bitcoin inclusion in national reserves may become a trend
As the value of Bitcoin continues to rise, national Bitcoin "pixiu" such as Bhutan are reaping rich rewards. At the same time, as major economies such as the United States gradually turn to a positive and open attitude towards Bitcoin, more and more countries are beginning to pay attention to and attach importance to crypto assets. It is expected that more countries will list Bitcoin as a national reserve asset in the future. Bhutan and El Salvador are typical examples.
In fact, in the past period of time, many countries around the world have proposed to include Bitcoin in national reserve assets. For example, Trump, the elected US president, has promised to list Bitcoin as a strategic reserve asset, and Trump's inauguration and the crypto-friendly US political arena have greatly increased the possibility of realizing this idea; Venezuelan opposition leader María Corina Machado also proposed to establish a national Bitcoin reserve system in the second half of this year, and said that Bitcoin is a "key component" in rebuilding Venezuela's economic and financial system, providing a "lifeline" for the Venezuelan people, allowing them to bypass the government-controlled exchange rate; Hong Kong SAR Legislative Council member Wu Jiezhuang also tweeted a few months ago that Bitcoin and Web3 are important nodes in the development of globalization, and global common development should be encouraged. In the future, under compliance, it is possible to consider including Bitcoin in the strategic fiscal reserves of a country or region. I believe that the SAR government will open the market responsibly and step by step.
It is worth mentioning that the German government lost at least $1.5 billion in profits by selling 50,000 bitcoins this summer. In October, bitcoin supporter Samson Mow was invited to speak at the German Bundestag to discuss issues related to national bitcoin strategy and proposed that Germany should include its bitcoins in its strategic reserves.
Several crypto industry leaders have also predicted this trend. For example, Binance founder CZ predicts that many countries will use Bitcoin as a reserve, including other cryptocurrencies; Bitcoin Magazine CEO David Bailey recently disclosed on social media that at least one sovereign country is actively acquiring Bitcoin and has become one of the top five holders; Satoshi Action Fund founder Dennis Porter recently said that he has received calls from five different countries about Bitcoin strategic reserves, hoping that he will draft regulations to establish strategic Bitcoin reserves. He also emphasized, "Now, the success we have achieved through legislation in the United States can be exported to all parts of the world."
Crypto analyst PlanB pointed out that starting from March 2025, it is expected that Bhutan, Argentina, Dubai and other countries will gradually use Bitcoin as legal tender, and from April, the United States will also start a strategic reserve of Bitcoin under the promotion of Trump. Other countries will follow closely, especially non-EU countries will join this trend.
Bitcoin: An important bargaining chip in the game between major powers
Why are these sovereign countries beginning to get involved in Bitcoin? The fundamental reason lies in the changes in global geopolitics.
In the past decade, the global economy has experienced many major changes, and anti-globalization and trade protectionism have risen. The hedging properties of traditional assets have been greatly tested. The Federal Reserve has implemented aggressive interest rate hike policies in recent years, which has exacerbated uncertainty in the financial market and significantly increased global demand for safe-haven assets. As a decentralized, non-tamperable digital asset, Bitcoin is increasingly viewed by institutions and investors as an anti-inflation and anti-risk tool.
Although Bitcoin has no physical backing, its unique properties make it an important "digital gold". As the global demand for gold purchases increases, countries such as Russia, Turkey and China have hoarded gold to hedge against the risk of the US dollar, and the enthusiasm for investing in digital assets is also rising. As a supplement to gold, Bitcoin can provide these countries with a more flexible and convenient hedging method.
The current market forecasts that the next US President Trump will further relax the regulation of digital assets. Once he takes office in the future, his crypto-friendly policies will have a profound impact on the global perception of Bitcoin. If the Trump administration vigorously promotes the Bitcoin strategy, both the US allies and competitors will have enough motivation to buy Bitcoin to hedge their risks. This move will not only reduce dependence on the US dollar, but also provide the financial system with an anti-inflation tool. This will significantly increase the international demand for Bitcoin and push its price to new heights.
Aiming for $200,000
Historically, each Bitcoin halving event has been followed by a sharp rise in price. For example, Bitcoin prices soared after the halving events in 2012, 2016, and 2020. The 2024 Bitcoin halving could be a catalyst for price increases, with a bull market peak expected within 12-18 months after the halving.
The increase in institutional investors in Bitcoin in this cycle and the launch of the US Bitcoin spot ETF have led to the world's largest asset management companies increasing their investments in Bitcoin. The participation of institutional investors may provide more liquidity and stability, and is also an important driving force for this round of Bitcoin price increases.
The Federal Reserve has also entered a new round of interest rate cuts. The latest FOMC meeting of the Federal Reserve announced a 25 basis point interest rate cut. According to its dot plot, it is expected to enter an interest rate cut cycle in 2025. The rising expectations of interest rate cuts will also support the upward momentum of Bitcoin prices.
As of 2024, the global gold market value is approximately $13.5 trillion. In comparison, Bitcoin's market value is approximately $1.57 trillion, one-tenth of that. Despite its smaller market value, Bitcoin has the characteristics of supply scarcity (a total of only 21 million coins), decentralization, convenient storage and technological advantages, all of which make Bitcoin have great potential in terms of future market value.
Since the Republican Party represented by Trump won both the Senate and the House of Representatives, cryptocurrencies will have a relaxed regulatory policy and monetary environment before the next round of mid-term elections in the United States, that is, before 2027. If Bitcoin can reach a market value of 4 trillion within two years, its price will reach 200,000 US dollars. We will wait and see what the final price will be.
