Original author: Lian Jun
Original source: Economic Daily
Recently, influenced by multiple factors such as the Federal Reserve's interest rate cuts and the outcome of the U.S. elections, Bitcoin's trading price has surged significantly, attracting international market interest. There are even rumors that the U.S. will promote Bitcoin as a national strategic reserve asset, causing related topics to heat up quickly. The attitude and actions of the new U.S. government towards Bitcoin and other cryptocurrencies, as well as their impact on the global financial landscape, deserve close attention.
Entering November, Bitcoin's trading price has seen a rapid rise, breaking through $80,000 per coin on the 10th, surpassing $90,000 per coin on the 13th, and reaching $93,000 per coin in the early hours of the 14th, with prices fluctuating above $90,000 afterward. Market analysis suggests that factors such as the Federal Reserve's continued interest rate cuts in November and the Republican Party's commitment to multiple supportive measures for cryptocurrencies during the campaign have propelled Bitcoin's rapid price rise. U.S. media reports indicate that Republican Senator Cynthia Lummis of Wyoming plans to promote a bill in the new Congress next year to sell part of the Federal Reserve's gold to establish a strategic Bitcoin reserve. This has led some market traders to believe that 'cryptocurrency is about to enter a golden era.'
However, due to the complexity of factors influencing Bitcoin price trends, with a high degree of uncertainty and the historical occurrence of significant ups and downs, a more comprehensive observation of its future trends is warranted.
Bitcoin prices are influenced by various factors including supply and demand dynamics, macroeconomic conditions, and market sentiment. On the supply side, Bitcoin's halving mining reward mechanism is one of the important factors for its price increase. This year, Bitcoin experienced another halving event, providing support for subsequent price increases. On the demand side, during the campaign, the Republican Party promised to incorporate Bitcoin into the national reserve asset, to make the U.S. the 'world capital of cryptocurrency,' and to appoint regulators interested in digital assets, which has driven an increase in Bitcoin demand. From a macro perspective, the stabilization of global economic growth, easing inflationary pressures, and central banks in Europe and America initiating interest rate cuts have brought more liquidity to the market. Additionally, when Bitcoin prices break through key levels, market optimism becomes an important driver of price increases.
Although the incoming new U.S. government has shown strong interest in cryptocurrencies, making Bitcoin a true national reserve asset still requires passing through multiple 'gates.'
From a policy perspective, classifying Bitcoin as a strategic reserve asset requires a complex legislative process involving coordination among multiple regulatory agencies and balancing interests. Moreover, traditional U.S. financial institutions, conservative lawmakers, and interest groups skeptical of digital assets are likely to oppose this, making implementation challenging. From the market and regulatory perspectives, Bitcoin prices often experience severe fluctuations, which diverges significantly from the strict stability requirements for national reserves. Additionally, the U.S. cryptocurrency regulatory framework is inadequate; incorporating Bitcoin into the national reserve system necessitates establishing a more comprehensive legal framework. Furthermore, U.S. media have pointed out that Bitcoin has never been a good inflation hedge—its relationship is closer to speculative stocks, 'rather than traditional inflation hedges like gold or inflation-linked bonds.'
During the previous term of the Republican government, the attitude towards Bitcoin was not friendly, viewing it as 'air without value foundation.' However, during the recent election campaign, this attitude underwent a 180-degree reversal. Some analysts point out that this shift reflects the new U.S. government's desire for the U.S. to take a leading position in the digital currency field, thus maintaining competitiveness in the global economy. It is also an attempt to reduce national debt issuance through Bitcoin appreciation without increasing government deficits, in the face of immense national debt pressure.
Looking further, the consequences of the United States' long-standing abuse of the dollar's status, unrestrained money supply, and severe overextension of dollar credit have become evident, accelerating the pace of 'de-dollarization' in many countries. The shift in attitude of some in the U.S. towards Bitcoin is an attempt to maintain the weakened international status of the dollar.
The surge in Bitcoin prices seems to have given some people renewed hope for a process reminiscent of 'the transition from the collapse of the Bretton Woods system to the establishment of the petrodollar.' However, the inherent properties of Bitcoin are unstable; once it becomes a strategic reserve asset, it may pose greater challenges for regulators and could trigger caution from other countries, escalating frictions in the international financial arena. It remains uncertain whether the U.S. economy, which has been eroded by high inflation for days, can withstand this impact.
Original link
