Original | Odaily Planet Daily (@OdailyChina)
Author | Wenser (@wenser2010)
Latest news: The Secretary of Commerce nominated by President-elect Trump, Howard Lutnick, is negotiating with Tether, the world's largest stablecoin operating company, to launch a project 'providing dollar loans to customers collateralized by Bitcoin', with initial funds of $2 billion. Insiders have disclosed that Lutnick's financial services company Cantor Fitzgerald is seeking funding from Tether, and the project's final scale may reach hundreds of billions of dollars.
According to previous reports, over half of Tether's stablecoin reserves (approximately $39.2 billion) are managed by Cantor Fitzgerald, which, as one of 25 primary dealers that can trade directly with the Federal Reserve, earns tens of millions of dollars in profits annually from this.
Meanwhile, the total U.S. national debt has reached a new historical high, exceeding $36 trillion. Combined with Trump's previous statements about 'establishing a Bitcoin strategic reserve to address the U.S. national debt crisis', market participants believe this move may signify the imminent launch of the U.S. Bitcoin strategic reserve initiative.
Odaily Planet Daily will provide an in-depth interpretation of historical information related to the U.S. Bitcoin strategic reserve, current situation analysis, challenges faced, and subsequent impacts for readers' reference.
Dreaming Back to the Beginning of the 'Bitcoin Strategic Reserve': Campaign Declaration or Policy Plan?
Looking back, the 'Bitcoin Strategic Reserve' was first mentioned around July of this year—
In early July, German parliament member Joana Cotar strongly criticized the government's move to sell a large amount of Bitcoin, stating that the German government should reconsider this strategy and compare it with 'discussing Bitcoin as a strategic reserve currency with the U.S.' The story is well known; based on the recent high price of Bitcoin, the German government's 'missed profits' from selling Bitcoin expanded to $2.03 billion.
In late July, Ari Paul, founder and CIO of BlockTower Capital, stated that the news of 'the U.S. government's plan to hold Bitcoin as its strategic reserve' could be 'bullish' for its price, but achieving this goal in the short term is unrealistic. He believes that 'while the next president may say they 'do not plan to sell' any Bitcoin currently held by the government, it does not mean they are actually 'establishing a Bitcoin strategic reserve.' This was also the mainstream view in the market at the time, with many believing that Trump was more about expressing a 'crypto-friendly attitude' to garner the votes of crypto voters rather than genuinely wanting to establish a Bitcoin strategic reserve.
But soon, this situation experienced a reversal - Trump's explicit statements at the Nashville Bitcoin Conference at the end of July sharply contradicted numerous market participants.
In the article (Full Transcript of Trump's Bitcoin Conference Speech: Establishing a Bitcoin Strategic Reserve, Dismissing Gary Gensler), he stated:
If cryptocurrency is to define the future, I want it to be mined, minted, and produced in the U.S., not elsewhere. If Bitcoin is to go 'To Da Moon' as we say, I want the U.S. to lead this trend... I am proud to be the first major party candidate in U.S. history to accept Bitcoin and cryptocurrency donations.
Bitcoin represents freedom, sovereignty, and independence from government coercion and control. The Biden-Harris administration's suppression of cryptocurrencies and Bitcoin is wrong and detrimental to our country. We will keep every Bitcoin job in America. That is what we will do. Upon taking office, I will immediately establish a Presidential Advisory Committee on Bitcoin and cryptocurrency.
Bitcoin does not threaten the dollar. The actions of the current U.S. government are the real threat to the dollar. The dangers to our financial future do not come from cryptocurrencies but from Washington D.C. They stem from trillions of dollars in waste, rampant inflation, and open borders, as well as providing welfare and free healthcare to millions of illegal immigrants flooding into our country. The absurd waste authorized by our opponents (referring to the Democratic government) has led to the inflation disaster that Bitcoin supporters have long predicted. The value of every dollar is rapidly being erased by 20%, 30%, or even 40%. You understand this, but many others do not. The life savings of millions of Americans are being rapidly destroyed. Out-of-control inflation is an invisible tax on the middle class. Indeed. It is an invisible tax. I call it the 'Biden Tax.'
With low energy costs, the U.S. will become a globally recognized Bitcoin mining powerhouse.
The federal government holds nearly 210,000 Bitcoins, accounting for 1% of the total supply. For a long time, our government has violated the basic principle that every Bitcoin enthusiast knows: 'HODL, don't sell.' Right? How can I understand this? Never sell your Bitcoin.
The federal government holds nearly 210,000 Bitcoins, accounting for 1% of the total supply. If elected, my government policy will be that the U.S. will retain 100% of all Bitcoins currently held or acquired in the future, which will effectively serve as the core of the Bitcoin national strategic reserve. We will take measures to transform this vast wealth into a permanent national asset that benefits all Americans.
Now, after Trump's victory, the Crypto Advisory Committee has been put on the agenda, and many crypto individuals have begun to interact with the Trump administration; the previously confirmed 'Bitcoin National Strategic Reserve' naturally also stirs the hearts of countless crypto industry people.
At the end of July, Senator Cynthia Lummis proposed the (Bitcoin Strategic Reserve Act of 2024), calling for 'an annual purchase of 200,000 Bitcoins, reaching 1 million within five years', accounting for about 5% of the total Bitcoin supply. The bill plans to use existing U.S. Treasury funds to purchase Bitcoin in amounts corresponding to the U.S. Treasury's gold allocation; within 48 hours, senators related to the bill received more than 2,200 letters asking them to jointly initiate and support Cynthia Lummis's 'Bitcoin Strategic Reserve Act'. Previously, Cynthia Lummis also stated: 'The U.S. national debt has reached $35 trillion, and the Bitcoin strategic reserve can stop this out-of-control train and help future generations repay the national debt.'
In early August, Trump mentioned in an interview that Bitcoin could be used to pay off the U.S. government's national debt of up to $35 trillion and avoid an imminent debt crisis. His exact words were: 'Maybe we will pay $35 trillion of the (national debt) with a little crypto check, right? We will give them a little Bitcoin and wipe out our $35 trillion.'
It is evident that at that time, Trump had already made preliminary plans for the 'use' of the Bitcoin strategic reserve - to use the continually rising price of Bitcoin to repay the massive debts accumulated over the years.
Star, CEO of OKX, and Michael Saylor, founder of MicroStrategy, have also expressed their views on the U.S. Bitcoin strategic reserve plan. The former believes that 'in the future, every central bank will hold a large Bitcoin reserve'; the latter sees the Bitcoin strategic reserve as another 'Louisiana Purchase moment' for the U.S. (Note: Thomas Jefferson purchased the Louisiana Territory for $15 million in 1803, nearly doubling the size of the U.S. territory, meaning that the U.S. Bitcoin strategic reserve will be an important step for the U.S. to seize Bitcoin hegemony), elevating its historical significance.
After Trump won the U.S. election in early November, Cynthia Lummis published: 'The future is bright (The future is ₿right)', stating, 'We will establish a Bitcoin strategic reserve', with the iconic 'Bitcoin until 100k laser eyes avatar', which appears quite prescient in light of Bitcoin's price nearing $100,000.
Cynthia Lummis's laser-eyed avatar
Based on the above information and Trump's approval of Musk's establishment of a DOGE government efficiency department, the U.S. Bitcoin strategic reserve plan is not only a campaign declaration for 'vote pulling', but also a policy plan prepared to alleviate the growing national debt pressure and curb inflation. After all, the arrow is on the string and must be released.
There is no doubt that this move has already been placed on Trump's agenda, and the next step to consider is: how specifically will the Bitcoin strategic reserve be implemented?
The U.S. Bitcoin Strategic Reserve in Progress: Stealthy Advancement or Grand Action?
According to the (Bitcoin Strategic Reserve Act of 2024) proposed by Senator Cynthia Lummis, it primarily defines the content of the bill as a 'Bitcoin purchasing plan':
Plan to purchase no more than 200,000 Bitcoins per year for five years, totaling 1,000,000 Bitcoins. This will account for about 5% of the total Bitcoin supply; the purchasing process will be transparent and strategic to minimize market disruption; the goal is to ensure that the U.S. government can hold a substantial amount of Bitcoin over the next twenty years, providing a long-term financial hedge for the nation.
The bill proposes to utilize existing Federal Reserve and Treasury funds to purchase Bitcoin. Specific methods include reassessing the market value of the Federal Reserve's gold certificates and using the difference for Bitcoin purchases. Additionally, the bill plans to reduce the free surplus funds of the Federal Reserve banks, with the savings allocated to Bitcoin purchasing plans.
According to the bill, the Bitcoins purchased by the government will be held for at least 20 years. During this period, these Bitcoins must not be sold, exchanged, or auctioned, unless used to repay national debt. After the initial holding period, no more than 10% of the reserves may be sold every two years. This rule aims to ensure the long-term stability of Bitcoin reserves while providing some flexibility to meet future economic demands.
On November 14, according to FOX News, Pennsylvania Republican Representative Mike Cabell proposed the (Pennsylvania Bitcoin Strategic Reserve Bill) (Note: Pennsylvania is the first state to introduce legislation allowing for 'direct purchases of Bitcoin'. The previous bill regarding personal trading was the (Bitcoin Rights Bill)). It will allow the state treasury to allocate 10% of its approximately $7 billion state funds to Bitcoin to help combat inflation and diversify its investments beyond traditional assets like bonds and cash reserves. According to media reports, the bill aims to allow the state to invest 10% of certain funds, including the General Fund, Rainy Day Fund, and State Investment Fund, in Bitcoin. According to the state's 2023 Treasury Annual Investment Report, these funds manage approximately $51 billion in assets, so a 10% allocation would represent about $5.1 billion in Bitcoin investment.
On November 17, Dennis Porter, CEO of the U.S. Bitcoin advocacy organization Satoshi Action Fund (SAF), stated that the organization has 'open-sourced' its Bitcoin strategic reserve (Strategic Bitcoin Reserve) policy model, mentioning:
Inflation has severely eroded the purchasing power of state finances and retirement funds across the U.S., affecting the economic well-being of residents; although state governments cannot control federal monetary supply and macroeconomic policies, they have a responsibility to protect the financial health of their states.
As an anti-inflation asset, Bitcoin's market value has soared to over $1 trillion over the past 16 years, and its acceptance as a currency is becoming widespread. It can also be viewed as a hedge against inflation, as mentioned in the bill, states should use Bitcoin to guard against inflation.
State finance officials can invest public funds in Bitcoin from the following funds: 1) State General Fund; 2) Budget Stabilization Reserve Fund; 3) State Investment Fund; 4) Other state funds deemed appropriate by the legislative body.
Funding invested in Bitcoin must not exceed 10% of the total account funds.
Acquired digital assets should be held in one of the following ways: A. State finance officials hold directly using secure custodial solutions; B. Held by qualified custodians on behalf of the state; C. Held in the form of exchange-traded products issued by registered investment companies; 4. If it does not increase state financial risk and complies with regulations, finance officials may use rules to loan digital assets for additional income.
Combining the related cooperation between Trump's nominated Secretary of Commerce Howard Lutnick and Tether, we can briefly summarize the execution of the U.S. Bitcoin strategic reserve plan as follows:
1. The U.S. government officially intervenes: Utilizing Federal Reserve and Treasury funds for 'market-wide procurement', this method is the most radical, hence the likelihood is relatively low;
2. U.S. states proceed separately: Just like Pennsylvania has initiated a wave of state treasury fund investments, SAF is negotiating with another 10 states to implement similar legislation, thus its likelihood is moderate;
3. U.S. government existing Bitcoin holdings + cryptocurrency industry cooperative reserves: This approach can lay a foundation for the Bitcoin strategic reserve based on the U.S. government's current holding of over 200,000 Bitcoins, while also setting the tone for friendly regulation and industry development in the future. This is a path with a higher possibility.
Nevertheless, if Trump truly wants to push the Bitcoin strategic reserve into reality, he still faces some intuitive challenges.
The Boulders Blocking the 'Path of the Bitcoin Strategic Reserve': Time, Law, and Market
In simple terms, the main issues that need to be resolved on the path of the Bitcoin strategic reserve include the following aspects:
Time Cost: 100 Days or Longer?
Republican Senator Cynthia Lummis expressed her hope to promote her Bitcoin reserve bill nationwide within the first 100 days of President Trump's term (Note: Trump will officially take office on January 20, 2025, and the 100 days will approximately end in late April 2025).
Analyst PlanB shared his predictions for Bitcoin's price trajectory over the next few years in September, mentioning:
In November, after Trump's election victory, ending the Democratic Biden/Harris/Warren/Gensler crackdown on cryptocurrencies, Bitcoin surged to $100,000... In April 2025, Trump and America will begin to establish a strategic Bitcoin reserve, and Bitcoin's price will rise to $400,000; in May, other countries (excluding the EU) will join the competition, and Bitcoin's price will reach $500,000; from July to December: FOMO drives Bitcoin's price to a historical high of $1 million.
It is worth mentioning that the previous (Bitcoin Rights Bill) was planned to be submitted to the Republican-led Senate for review in the coming weeks. If passed, it would then be submitted for signature by Wyoming Governor Josh Shapiro, while voting resolutions and implementations at the national level will undoubtedly require more time.
Legal Obstacles: The Power Struggle Between the U.S. President and the Federal Reserve
There is no doubt that the previous 'power struggle' between Trump and Federal Reserve Chairman Powell will also affect whether the Bitcoin strategic reserve plan can proceed smoothly, after all, as 'America's wallet', the Federal Reserve's position is transcendent.
The contradiction between the two can even be traced back to Trump's previous term when he threatened, 'If Powell decides not to lower interest rates, I will demote him.' In February this year, Trump reiterated in an interview: 'If elected again in November, I will not appoint Jerome Powell as Chairman of the Federal Reserve.' According to previous reports, Powell's term as Chairman of the Federal Reserve will also end in May 2026. After Trump's victory, according to the Wall Street Journal, if Trump tries to dismiss Federal Reserve Chairman Powell, Powell is prepared for a legal battle.
Market Barriers: General Skepticism Mixed with Expectations
Mike Novogratz, CEO of Galaxy Digital, previously expressed skepticism about the idea of establishing a U.S. Bitcoin strategic reserve proposed by elected President Trump, not believing that the dollar needs support from assets like Bitcoin, but stating that the U.S. should enhance its Bitcoin reserves to demonstrate its commitment to becoming a technology-oriented country.
Jennifer J. Schulp, Director of Financial Regulation Research at the Cato Institute's Center for Monetary and Financial Alternatives, also stated: 'This still puts the government's money at stake, and Bitcoin has not shown itself to be a particularly stable asset. The bill requires senators and congressional members to gain greater confidence in its long-term viability, which they may not understand as well as cryptocurrencies.'
Anthony Pompliano, founder and CEO of Professional Capital Management, stated, 'Trump's level of support for Bitcoin is enough to redefine the way the U.S. treats cryptocurrencies and the digital asset market. We have a president who is very supportive of Bitcoin and who promises to protect the rights of Bitcoin users. This groundbreaking approach will change the economic policy of the White House. Trump holds Bitcoin and intends to establish a strategic reserve for the U.S., which is a flag.' Additionally, he predicts that this reserve will be established within 100 days.
Further interpretations of the challenges can also refer to previous analyses by Economic Daily - 'To truly make Bitcoin a national reserve asset for the U.S., multiple 'hurdles' must be overcome'.
Of course, the Bitcoin strategic reserve does not face one-sided opposition; the asset management giant VanEck has cast a positive vote. Previously, VanEck's head of digital asset research, Matthew Sigel, stated: 'VanEck supports the Bitcoin strategic reserve. No need to cite 'insiders'; we will announce it ourselves.'
Regardless of when the U.S. action settles, the horn of the 'national-level competition for Bitcoin strategic reserves' has already sounded.
The Future of Bitcoin Strategic Reserves: A National-Level 'Crypto Arms Race'?
In early November, according to Bitcoin Magazine, German parliament member Joana Cotar stated, 'If the U.S. purchases Bitcoin as a strategic reserve, I believe all European countries will experience FOMO.'
Around November 12, Satoshi Action Fund founder Dennis Porter stated that he had received calls from five countries regarding the Bitcoin strategic reserve issue.
On November 16, asset manager and investor Anthony Pompliano stated that a global Bitcoin 'arms race' between sovereign nations and governments has already begun. Moreover, he believes that 'market participants believe that elected President Trump will keep his campaign promise to establish a Bitcoin strategic reserve, which aligns with America's best interests and can prevent being outpaced by other countries. Currently, a Bitcoin race is underway globally. Whether you are a local, state, or federal government official, you should find ways to incorporate as much Bitcoin as possible into your balance sheet. This is not like gold; we can dig more from the ground.' He explained that the competition to adopt Bitcoin is primarily driven by currency depreciation and pointed out that American residents have lost about 25% of their purchasing power over the past five years.
On November 18, Polish presidential candidate Sławomir Mentzen promised to adopt a Bitcoin strategic reserve if elected.
On November 19, Binance founder CZ praised MicroStrategy founder Michael Saylor's speech and mentioned: 'Wonderful speech, worth listening to. Also, thanks for supporting Binance in the video. Countries will compete to print money to buy Bitcoin, namely the Bitcoin Strategic Reserve. No one wants to be the last one.'
On November 21, macroeconomic expert Mark Moss, host of the Bitcoin podcast (Mark Moss Show), stated that Trump positioning himself as the 'Bitcoin president' could drive the U.S. to adopt a strategic Bitcoin reserve, which would trigger a 'game' leading to other countries' 'sovereign-level FOMO (fear of missing out)'. He mentioned that Senator Cynthia Lummis has proposed a bill to establish a strategic Bitcoin reserve, planning to increase it by 200,000 Bitcoins annually until reaching an account holding of 1 million Bitcoins. Under Trump's leadership, this plan is 'very likely' to become a reality, 'If the U.S. does this, G7 and G20 countries will all be affected... Other countries are already starting to pay attention to this matter and begin purchasing Bitcoin, which brings tremendous upward momentum to Bitcoin's price.'
It is evident that under the dual pressure of inflation and interest rate cuts on the dollar, Bitcoin has become a 'solution' that is expected like the former 'Bretton Woods system', and this is also a race where 'one step slow, step by step slow.'
Conclusion: Bitcoin is not the goal but the means; monetizing debt is the way.
As of November 25, the previously successful prediction market Polymarket, which forecasted Trump's election as U.S. President, had attracted $845,000 in betting funds for the betting activity on 'Trump will establish a Bitcoin strategic reserve within 100 days of taking office', with the current probability of the event reported at 30%, down approximately 30% from the high point after Trump's election on November 7, reflecting a certain degree of market cooling in expectations for this matter.
However, at the end of the article, I want to emphasize again that the essence of the Bitcoin strategic reserve is not merely to accumulate Bitcoin. Possessing more Bitcoins is unlikely to provide a quick relief for the U.S.'s massive $36 trillion national debt. After all, just as 'distant water cannot quench immediate thirst', 'slow money cannot cure urgent illness', but once Bitcoin is incorporated into the 'national financial perspective' and then 'monetized debt', that is, using the gradually rising cryptocurrency to pay off medium- to long-term debts in stages, it may be the 'cure' prepared by Trump and his cabinet members for the U.S. economy.
As for the efficacy, whether it is a cure or a terminal illness, time will tell.
Recommended Reading
How Did Trump's 'Crypto Patriarch' Come to Be?
Will Trump's ascension push BTC to break $100,000? A detailed analysis of views in the crypto market before the end of the U.S. election.
Trump Nominates Secretary of Commerce: How Legendary is Howard Lutnick, Who Manages Half of USDT Reserves?
Getting Close to Tech and Politics: The Alternative Combination of a Tech Maverick and a Rebellious Politician
Bitcoin Strategic Reserve Bill 2024
From America's historically successful strategic land acquisitions to Bitcoin reserves: A forward-looking vision for the (2025 Bitcoin Strategic Reserve Draft)
