Original | Odaily Planet Daily (@OdailyChina)
Author | Wenser (@wenser 2010)
Latest news: U.S. President-elect Trump's nominated Secretary of Commerce Howard Lutnick is negotiating with Tether, the world's largest stablecoin operator, to initiate a project 'providing dollar loans to customers using Bitcoin as collateral', with initial funding of $2 billion. Sources revealed that Lutnick's financial services firm Cantor Fitzgerald is seeking Tether's funding, and the project's final scale could reach hundreds of billions of dollars.
According to previous news, more than half of Tether's stablecoin reserves (approx. $39.2 billion) are managed by Cantor Fitzgerald, which is one of 25 primary U.S. Treasury bond traders known on Wall Street and can directly trade with the Federal Reserve. The profits earned by this company each year amount to tens of millions of dollars.
Meanwhile, the total U.S. national debt has reached a historic high, exceeding $36 trillion. Combined with Trump's previous statements about 'establishing a Bitcoin Strategic Reserve to solve the U.S. national debt crisis', market participants believe this move may indicate that the U.S. Bitcoin Strategic Reserve actions are about to commence.
Odaily Planet Daily will provide an in-depth interpretation of the historical information, current analysis, challenges faced, and subsequent impacts related to the U.S. Bitcoin Strategic Reserve in this article for readers' reference.
Looking back at the beginning of 'Bitcoin Strategic Reserves': Campaign declaration or policy plan?
Looking back, the 'Bitcoin Strategic Reserve' was first mentioned around July this year—
In early July, German parliament member Joana Cotar strongly criticized the government's large-scale sale of Bitcoin, stating that the German government should reconsider this strategy and compare it to 'discussing with the U.S. about making Bitcoin a strategic reserve currency.' The rest of the story is well known; based on the recent high prices of Bitcoin, the German government's 'missed profits' from selling Bitcoin have 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 intend to sell' any Bitcoins currently held by the government, this does not mean they are actually 'establishing a Bitcoin Strategic Reserve.' This was also the mainstream view in the market at that time; many believed that Trump was more expressing a 'crypto-friendly attitude' to gain the support of crypto voters rather than genuinely wanting to establish a Bitcoin Strategic Reserve.
But soon, this situation turned around—Trump's explicit remarks at the Nashville Bitcoin Conference at the end of July strongly contradicted numerous market participants.
Quote from the article (Transcript of Trump's Bitcoin Conference Speech: Establishing Bitcoin Strategic Reserves, Firing Gary Gensler):
If cryptocurrency is to define the future, I hope it is mined, minted, and produced in the U.S., not elsewhere. If Bitcoin is to go 'To Da Moon' as we say, I hope the U.S. leads 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 cryptocurrency and Bitcoin is wrong and very 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 Bitcoin and cryptocurrency presidential advisory committee.
Bitcoin does not threaten the dollar. It is the current actions of the U.S. government that are the real threat to the dollar. The danger to our financial future does not come from cryptocurrency, but from Washington, D.C. It stems from trillions of dollars in waste, rampant inflation, and open borders, as well as providing benefits and free healthcare to millions of illegal immigrants pouring into our country. The absurd waste approved by our opponents (referring to the Democratic government) has led to the inflation disaster that Bitcoin supporters have long predicted. Every dollar's value is quickly 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. It truly is. This is an invisible tax. I call it the 'Biden Tax.'
With low energy costs, the U.S. will become a globally recognized powerhouse in Bitcoin mining.
The federal government owns nearly 210,000 Bitcoins, accounting for 1% of the total supply. But for a long time, our government has violated the fundamental principle that every Bitcoin enthusiast knows: 'Hold, don't sell.' Right? How can I understand this? Never sell your Bitcoin.
The federal government owns nearly 210,000 Bitcoins, accounting for 1% of the total supply. If I am 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 convert this enormous wealth into a permanent national asset for the benefit of all Americans.
Now that Trump has won the election, the crypto advisory committee is already on the agenda, and many crypto enthusiasts have begun to engage with the Trump administration; the previously confirmed 'national strategic reserve of Bitcoin' is naturally on the minds of countless crypto industry participants.
At the end of July, Senator Cynthia Lummis proposed the (Bitcoin Strategic Reserve Act of 2024), calling for 'the purchase of 200,000 Bitcoins annually, reaching 1 million within five years,' accounting for approximately 5% of the total Bitcoin supply. This bill plans to utilize existing funds from the U.S. Treasury to purchase Bitcoin corresponding to the amount allocated for U.S. Treasury gold; within less than 48 hours, U.S. senators related to the bill received over 2,200 letters urging them to co-sponsor and support Cynthia Lummis' 'Bitcoin Strategic Reserve Act.' Previously, Cynthia Lummis also stated: 'The U.S. national debt has reached $35 trillion; 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 repay the U.S. government's national debt of up to $35 trillion and avoid an imminent debt crisis. His exact words were: 'Perhaps we will repay $35 trillion of (national debt), giving them a little cryptocurrency check, right? We will give them a little Bitcoin and wipe away our $35 trillion.'
It is clear that at that time, Trump had a preliminary plan for the 'use' of the Bitcoin Strategic Reserve—using the continuously rising price of Bitcoin to repay the massive debts accumulated over the years.
OKX CEO Star and MicroStrategy founder Michael Saylor also shared their views on the U.S. Bitcoin Strategic Reserve plan. The former believes that 'in the future, every central bank will hold a significant amount of Bitcoin reserves'; the latter sees Bitcoin Strategic Reserves as another 'Louisiana Purchase moment' for the U.S. (Note from Odaily: Thomas Jefferson purchased the Louisiana Territory for $15 million in 1803, nearly doubling the area of the United States, meaning the U.S. Bitcoin Strategic Reserve will be an important step in competing for Bitcoin hegemony), greatly elevating its historical significance.
After Trump won the U.S. election in early November, Cynthia Lummis subsequently stated, 'The future is bright (The future is ₿right)', and 'We will establish a Bitcoin Strategic Reserve', with the iconic 'Bitcoin until 100k laser-eye avatar' as the accompanying image. Given that Bitcoin's price is approaching $100,000, this undoubtedly shows foresight.
Cynthia Lummis released the laser-eye avatar
Considering the above information and Trump's approval of Musk's establishment of the DOGE government efficiency department, the U.S. Bitcoin Strategic Reserve plan is not only a campaign declaration for 'pulling votes' but also a 'policy plan' prepared to alleviate the growing pressure of national debt and curb inflation. After all, the arrow is on the bowstring and must be released.
Undoubtedly, this step has already been placed on Trump's policy agenda, and the next step to consider is—how will Bitcoin Strategic Reserves be specifically implemented?
U.S. Bitcoin Strategic Reserve in progress: Stealth advancement or overt implementation?
According to the Bitcoin Strategic Reserve Act (BITCOIN Act of 2024) previously proposed by Senator Cynthia Lummis, the content of this bill is mainly defined as a 'Bitcoin purchasing plan':
The plan proposes to purchase no more than 200,000 Bitcoins annually over five years, for a total purchase of 1,000,000 Bitcoins. This will account for approximately 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 the nation with a long-term financial hedge.
The bill proposes to utilize existing federal reserve system and treasury funds to purchase Bitcoin. Specific methods include reassessing the Federal Reserve's gold certificates to reflect the market value of gold and using the difference to purchase Bitcoin. Additionally, the bill plans to reduce the free surplus funds of the Federal Reserve banks, directing the saved funds towards the Bitcoin purchasing plan.
According to the provisions of the bill, Bitcoins purchased by the government will be held for at least 20 years. During this period, these Bitcoins may not be sold, exchanged, or auctioned, except for repaying national debt. After the initial holding period, no more than 10% of the reserves may be sold within every two years. This rule is intended to ensure the long-term stability of the Bitcoin reserves while providing some flexibility to address future economic demands.
On November 14, according to FOX News, Pennsylvania Republican Representative Mike Cabell proposed the Pennsylvania Bitcoin Strategic Reserve Act (Note from Odaily Planet Daily: It is worth noting that Pennsylvania is the first state to introduce legislation related to 'allowing direct purchases of Bitcoin'; the previous bill regarding personal transactions was the Bitcoin Rights Act). This will allow the state's treasury to allocate 10% of its approximately $7 billion in 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 investments.
On November 17, the CEO of the U.S. Bitcoin advocacy organization Satoshi Action Fund (SAF), Dennis Porter, stated that the organization has 'open-sourced' its Bitcoin Strategic Reserve policy model, which mentions:
Inflation has severely eroded the purchasing power of state finances and retirement funds in the U.S., affecting the economic welfare of residents. While state governments cannot control federal monetary supply and macroeconomic policy, they are responsible for protecting the financial health of their state.
As an anti-inflation asset, Bitcoin's market value has soared to over $1 trillion in the past 16 years. It is widely accepted as a currency and can also be viewed as an inflation-hedging asset. The bill mentions that states should use Bitcoin to guard against inflation.
State treasury supervisors may 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.
Funds invested in Bitcoin should not exceed 10% of the total account funds.
The obtained digital assets should be held in one of the following ways: A. The state treasury supervisor uses secure custody solutions to hold directly; B. Held on behalf of the state by qualified custodians; C. Held in the form of exchange-traded products issued by registered investment companies; 4. If it does not increase the financial risk of the state and complies with regulations, the treasury supervisor may use the digital assets for loans to obtain additional income through rules.
Combining Trump-nominated Secretary of Commerce Howard Lutnick's related cooperation with Tether, we can briefly summarize the execution methods of the U.S. Bitcoin Strategic Reserve plan as follows:
1. The U.S. government officially enters the fray: Using Federal Reserve and Treasury funds for 'market procurement', this approach is the most radical and thus has a relatively low possibility;
2. The U.S. states are divided and proceeding: Just as Pennsylvania has initiated a wave of fund investments by state finances, SAF is negotiating with 10 other states to implement similar legislation, thus the possibility is moderate;
3. The U.S. government already has Bitcoin holdings + cryptocurrency industry cooperative reserves: This path not only combines the U.S. government's existing holdings of over 200,000 Bitcoins to lay the foundation for Bitcoin Strategic Reserves, but also sets the tone for future cryptocurrency-friendly regulation and industry development, making it a more feasible path.
Nevertheless, Trump still faces some intuitive challenges if he genuinely wants to push for the realization of the Bitcoin Strategic Reserve.
The boulder blocking the 'Bitcoin Strategic Reserve' path: Time, law, and market
In simple terms, the issues that need to be resolved on the road to Bitcoin Strategic Reserves mainly include the following:
Time cost: 100 days or longer?
Republican Senator Cynthia Lummis stated that she hopes to promote her Bitcoin Reserve bill nationwide within the first 100 days of Trump's presidency (Note from Odaily Planet Daily: Trump will officially take office on January 20, and the 100-day period would be around the end of April 2025).
Analyst PlanB shared his speculation about Bitcoin's market trends in the next few years this September, mentioning:
In November, Trump wins the election, ending the Democratic Biden/Harris/Warren/Gensler crackdown on cryptocurrency, and Bitcoin rises to $100,000... In April 2025, Trump and the U.S. will begin establishing strategic Bitcoin reserves, and Bitcoin's price rises to $400,000; in May, other countries (excluding the EU) will join the competition, and Bitcoin's price rises to $500,000; from July to December: FOMO drives Bitcoin's price to an all-time high of $1 million.
It is worth mentioning that the previous Bitcoin Rights Act was planned to be submitted to the Republican-led Senate for review in the coming weeks, and if approved, would then be submitted to Wyoming Governor Josh Shapiro for signing, while voting decisions and implementation at the national level undoubtedly require a longer time.
Legal obstacles: The power struggle between the U.S. President and the Federal Reserve
Undoubtedly, the previous 'power struggle' between Trump and Federal Reserve Chairman Powell will also affect whether the Bitcoin Strategic Reserve plan can proceed smoothly, as the Federal Reserve's status as 'America's wallet' is transcendent.
The conflict between the two can even be traced back to Trump's previous term, when Trump threatened, 'If Powell decides not to cut interest rates, I will demote him.' In February of this year, Trump reiterated in an interview: 'If elected again in November, I will not appoint Jerome Powell as Federal Reserve Chairman.' According to previous news, Powell's term as Federal Reserve Chairman will also end in May 2026. After Trump's victorious election, according to the Wall Street Journal, if Trump attempts to fire Federal Reserve Chairman Powell, Powell is prepared to engage in legal battles.
Market barriers: General skepticism mixed with expectations
Galaxy Digital CEO Mike Novogratz previously expressed skepticism about the idea of establishing a Bitcoin Strategic Reserve in the U.S. proposed by President-elect Trump, not believing that the dollar needs support from Bitcoin and other assets, but argued that the U.S. should enhance its Bitcoin reserves to show its commitment to being a technology-oriented nation.
Jennifer J. Schulp, Director of Financial Regulation Studies at the Cato Institute's Center for Monetary and Financial Alternatives, also stated: 'This is still putting government money at stake, and Bitcoin has not demonstrated itself as a particularly stable asset. This bill requires senators and congressmen to gain greater confidence leaps regarding its long-term viability, and they may not be so well versed in cryptocurrency.'
Anthony Pompliano, founder and CEO of Professional Capital Management, stated, 'Trump's level of support for Bitcoin is enough to redefine how the U.S. treats the cryptocurrency and digital asset market. We have a very Bitcoin-friendly president who promises to protect the rights of Bitcoin users; this innovative 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.' He also predicts that this reserve will be established within 100 days.
Further interpretations of the challenges can also be referenced from previous analyses by the Economic Daily—(To truly make Bitcoin a national reserve asset in the U.S., it still requires passing through multiple 'checkpoints').
Of course, the Bitcoin Strategic Reserve is not met with one-sided opposition; asset management giant VanEck has cast a vote in favor. Previously, Matthew Sigel, Head of Digital Asset Research at VanEck, stated: 'VanEck supports Bitcoin Strategic Reserves. No need to cite 'informed sources'; we will release it ourselves.'
Regardless of when U.S. actions settle, the horn of the 'national-level competition' for Bitcoin Strategic Reserves has sounded.
The future of Bitcoin Strategic Reserves: A national-level 'crypto arms race'?
In early November, Bitcoin Magazine disclosed that German parliament member Joana Cotar stated, 'If the U.S. purchases Bitcoin as a strategic reserve, then 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 the global Bitcoin 'arms race' between sovereign nations and governments has already begun. He also believes that 'market participants believe that President-elect Trump will honor his campaign promise to establish a Bitcoin Strategic Reserve, which aligns with the best interests of the U.S. and can prevent being outpaced by other countries. Currently, there is a Bitcoin race happening globally. Whether you are a local, state, or federal government official, you should find ways to incorporate as much Bitcoin as possible into the balance sheet. This is not like gold, which we can mine more from the ground.' He explained that the competition to adopt Bitcoin is primarily driven by currency depreciation and noted that U.S. 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 expressed appreciation for MicroStrategy founder Michael Saylor's speech, mentioning: 'Excellent speech, worth a listen. Also thanks for the support for Binance in the video. Countries will compete to print money to purchase Bitcoin, i.e., Bitcoin Strategic Reserve. No one wants to be the last.'
On November 21, macroeconomic expert Mark Moss, host of the Bitcoin podcast (The Mark Moss Show), stated that Trump positioning himself as the 'Bitcoin President' may drive the U.S. to adopt a strategic Bitcoin reserve, which will trigger 'games' leading to sovereign-level FOMO (fear of missing out) from other countries. He noted that Senator Cynthia Lummis has introduced a proposal to establish a strategic Bitcoin reserve and plans to add 200,000 Bitcoins annually until the balance reaches 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 be affected... Other countries have already started paying attention to this matter and began purchasing Bitcoin, providing immense upward momentum for Bitcoin prices.'
It is evident that under the dual pressure of inflation and interest rate cuts faced by the dollar, Bitcoin has become a 'solution' that is as highly anticipated as the former 'Bretton Woods system', and this is also a 'slow race'.
Conclusion: Bitcoin is not the goal but a means; monetizing debt is the key.
As of November 25, a betting event on Polymarket, a crypto prediction market that successfully predicted Trump's election as U.S. president, regarding 'Trump establishing a Bitcoin Strategic Reserve within 100 days of taking office' has attracted $845,000 in betting funds, with the current probability reported at 30%, which is about a 30% decrease from the high point after Trump's election on November 7, reflecting a certain degree of cooling in market 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 about hoarding Bitcoin. Having more Bitcoins is unlikely to produce a rapid short-term alleviation of the U.S.'s $36 trillion national debt. After all, as the saying goes, 'distant water cannot quench immediate thirst,' and 'slow money cannot cure urgent disease.' However, once Bitcoin is included in considerations at the 'national fiscal level,' and then 'monetizing debt'—that is, using the gradually rising cryptocurrency to periodically repay medium-to-long-term debt—it may be a 'cure' prepared by Trump and his cabinet members for the U.S. economy.
As for its effectiveness, whether it will be a cure-all or a chronic condition remains to be verified over time.
Recommended reading
How did America's 'crypto father' Trump come to be?
Will Trump's presidency push BTC to break $100,000? A detailed explanation of the views on the crypto market before the U.S. election concludes.
Trump's nominated Secretary of Commerce: How legendary is Howard Lutnick, who manages half of the USDT reserves?
Getting close to Trump and Musk: An alternative combination of tech enthusiasts and rebellious politicians
Bitcoin Strategic Reserve Act 2024
From the successful strategic land purchases in U.S. history to Bitcoin reserves: A forward-looking concept of the (2025 Bitcoin Strategic Reserve Draft)
