Is Trump about to start playing with Bitcoin? Will the dollar be bound to Bitcoin from now on?
Since entering the presidential race, Trump has played the Bitcoin card. For example, during the campaign, he declared that he would make the US the 'crypto currency capital of the world.'
Additionally, Trump plans to establish a national Bitcoin reserve. In short, it seems that Trump's next term will be closely intertwined with Bitcoin.
What exactly is the use of Bitcoin for the US? In response to Trump's approach to Bitcoin, what countermeasures do we have?
Is the king of understanding playing with Bitcoin?
As early as July of this year, this grand play regarding Bitcoin slowly began to unfold. At that time, Senator Cynthia Lummis proposed a Bitcoin bill.
According to the content of the bill, Cynthia Lummis intends to establish a network of Bitcoin vaults managed by the US Treasury.
Moreover, she also outlined the government's plan for the next five years. If this plan can be successfully implemented, the US government could purchase 200,000 Bitcoins annually, eventually accumulating up to 1 million Bitcoins, which would account for about 5% of the total Bitcoin supply.
It is evident that Cynthia Lummis's bill aligns with Trump's intentions.
Also in July of this year, Trump held a Bitcoin conference in Nashville, Tennessee. At the conference, Trump discussed the task of establishing a Bitcoin reserve.
According to Trump, the US has seized a large amount of Bitcoin through the crackdown on criminal activities. Currently, the US government holds a total of 200,000 Bitcoins, valued at about $18 billion.
If the Bitcoin held by the US government is used to build a reserve system, it would completely change the landscape of the global monetary system.
As the saying goes, 'talking without action is just a bluff.' Soon, Trump put his idea into action.
After Trump's victory, he appointed Paul Atkins as the next chairman of the US Securities and Exchange Commission.
This Paul Atkins has always been a supporter of Bitcoin. Therefore, it's undoubtedly the most suitable choice for him to take charge of Bitcoin matters.
With the signing of Paul Atkins' appointment, Bitcoin surged past the $100,000 mark.
As of now, $10 billion has flowed into US exchange-traded funds. This thing is specifically designed to invest in Bitcoin.
It can be seen that Trump's actions indeed indicate a significant bet on Bitcoin.
As a result, since Trump’s victory on November 5, the total market capitalization of cryptocurrencies has surged by $1.2 trillion. In no time, the entire crypto community celebrated the torrential wealth rain.
Responding to the trend of de-dollarization
At this point, many may wonder what Trump's purpose is in doing this. Does he also want to share in the profits from Bitcoin?
As for whether Trump can benefit from Bitcoin, we have no way of knowing. But the move he has made is undoubtedly aimed at countering the global trend of de-dollarization.
Why do I say this? Because now, countries around the world have basically developed a relationship with the dollar that is both close and distant.
For example, BRICS countries are gradually promoting measures to de-dollarize. Additionally, China and Russia are also making significant strides on the road to de-dollarization, with oil-rich Saudi Arabia directly using the RMB for payments.
It can be said that the territory occupied by the dollar is increasingly shrinking. In this case, the financial resources of the US are also in jeopardy.
It is well known that the reason the American people can live prosperous lives is largely due to the global harvesting effect of the dollar.
If the whole world starts abandoning the dollar and using the RMB, then the global currency trading system must be reshaped, and the US will no longer be able to arbitrarily exploit others.
The US is clearly very nervous about this outcome. Therefore, the US must take a series of measures to stop other countries' de-dollarization processes.
So how can this be achieved? It's simple: find a new anchor for the dollar. As long as there is a stable and valuable anchor, the status of the dollar will also be solidified.
Gold and oil are no longer reliable
In the past, the dollar established its dominant position by binding itself to gold and oil. After binding these two things, the dollar could conduct global exploitation. When it needed money, it simply printed it, taking as much as it wanted.
However, the dollar can no longer continue to bind these two things. Or rather, it is difficult to maintain the binding strength.
Take gold, for instance; in recent years, gold has visibly flowed out of the US at a rapid pace.
For example, Germany transported 300 tons of gold from the US between 2013 and 2016. Turkey also withdrew over 200 tons of gold from the US between 2017 and 2018.
After this, countries in the Middle East, Africa, and Southeast Asia also began to repatriate gold from the US.
Countries like India have significantly increased their gold reserves since the end of 2017. At one point, India even discovered cases of gold bars hidden in airport toilets.
It can be seen that countries are increasingly ramping up their gold acquisitions.
To avoid losing more gold, the US simply confiscated Russian assets in the US. Although this Russian gold is far less than the gold that has flowed to other countries, even small amounts count.
From the above analysis, it can also be seen that the dollar can no longer be clearly bound to gold. After all, there is almost no gold left, so what's the point of binding?
Setting gold aside, oil also seems to be losing support for the dollar. Many Middle Eastern oil-producing countries are increasingly distrustful of the US. For instance, Saudi Arabia's relationship with the US has become increasingly tense.
Previously, the Biden administration criticized little Salman for being 'savage' and 'lacking human rights'; meanwhile, Saudi Arabia has stopped purchasing large quantities of American weapons and has turned to China for arms. This indicates that the US-Saudi relationship has been drifting apart.
Other countries, including the UAE and Iraq, also have varying degrees of disagreement with the US. Under these circumstances, it becomes increasingly difficult for the US to rely on oil to bolster the dollar.
On this point, it can be seen from OPEC countries' refusal to increase oil production.
In 2022, the US demanded OPEC countries to increase oil production. Who would have thought that these countries not only refused but also announced a significant reduction in oil production, cutting 2 million barrels per day.
Seeing this situation, the US was furious and threatened to retaliate against OPEC countries. Faced with the US's outrage, OPEC countries clearly ignored it and insisted on cutting oil production.
It seems that the sword of oil can no longer be wielded in the hands of the US.
Serious internal divisions in the United States
In that case, what kind of anchor should the US find for the dollar? Clearly, cryptocurrency is a new option.
Musk has stated that Tesla will accept Bitcoin as a payment method for car purchases in the future. This indicates that in certain areas of the US, Bitcoin has already been accepted as legal.
In this case, it is only natural for Trump to play the Bitcoin card.
Of course, there are serious internal divisions in the US regarding whether Bitcoin should be legalized. For example, US Treasury Secretary Yellen stated that cryptocurrencies consume too many resources and are not very stable.
According to Yellen, Bitcoin is an extremely inefficient means of transaction. The energy consumed to process these transactions is staggering, so we cannot condone the rampant proliferation of Bitcoin.
This is also easily understandable. The mining and operation of Bitcoin indeed require massive amounts of electricity and graphics cards. Without a large number of high-performance servers, Bitcoin operations cannot be supported.
According to relevant individuals, the data loaded on global Bitcoin servers is comparable to Alibaba and Tencent. This indicates that the resource consumption of this thing is indeed no joke.
Besides consuming energy and computing power, Yellen also stated that Bitcoin is a highly speculative light asset with very unstable prices. What if your Bitcoin is worth $100,000 today and drops to $50,000 tomorrow? Wouldn't the holders be robbed?
Therefore, using Bitcoin as an anchor indeed carries significant risks. With one misstep, the dollar could be shorted.
The counterattack of RMB internationalization has begun
Of course, regarding Trump's new approach to Bitcoin, our country also has certain countermeasures, which is to insist on the internationalization of the RMB. As the international status of the RMB strengthens, we need not fear the dollar's various manipulations.
So how can we strengthen the international position of the RMB? Clearly, it needs an anchor. And gold is such a suitable anchor.
After all, for thousands of years, the value of gold has remained constant, and everyone loves it. Anchoring the RMB with gold can definitely create an enduring legacy.
We not only think this way, but we are also acting on it. On December 7, 2024, the People's Bank of China updated the current data on its gold reserve assets.
As of the end of November, our gold reserves amounted to 72.96 million ounces. Compared to 72.8 million ounces at the end of October, this is an increase of 160,000 ounces, equivalent to approximately 4.98 tons. This is also the first increase in gold reserves after the central bank paused its gold purchases for six consecutive months.
It can be seen that in terms of hoarding gold, our country is definitely quick and decisive.
While aggressively acquiring gold, our RMB internationalization process has also been steadily progressing. According to statistics, in 2023 alone, the cross-border payment amount in RMB reached 52.3 trillion yuan, a year-on-year increase of 24.1%.
In addition, our country has also conducted local currency swaps with multiple countries over the years. Countries like Russia, Malaysia, Singapore, Argentina, Brazil, and Kazakhstan are all our cooperation partners.
In just 2024, our country has signed nearly 4 trillion RMB in local currency swap agreements. It can be seen that we have made remarkable progress and achievements on the road to RMB internationalization.
In summary, the current US wants to use Bitcoin to bind the dollar, while we use gold to bind the RMB. As for who will ultimately be stronger, let's wait and see!
