Written by: Wenser, Odaily Planet Daily
Latest news: US presidential candidate Trump's nominated commerce secretary Howard Lutnick is in talks with Tether, the world's largest stablecoin operator, to launch a project 'providing USD loans to customers using bitcoin as collateral,' with initial funding of $2 billion. Insiders revealed that Lutnick's financial services company Cantor Fitzgerald is seeking funding from Tether, and the project's final scale could 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, a well-known Wall Street bond trader that can directly trade with the Federal Reserve, earning tens of millions of dollars in profits each year.
At the same time, the total US national debt has reached a new historical high, exceeding $36 trillion. Coupled with Trump's earlier remarks about 'establishing a bitcoin strategic reserve to address the US national debt crisis,' market participants believe this may indicate that the US's actions regarding the Bitcoin Strategic Reserve 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 US Bitcoin Strategic Reserve for readers' reference.
Dreaming back to the beginning of the 'Bitcoin Strategic Reserve': campaign declaration or governing plan?
Looking back, the mention of the 'Bitcoin Strategic Reserve' first came up around July this year—
In early July, German MP Joana Cotar strongly criticized the government's large-scale sale of bitcoins, stating that the German government should reconsider this strategy and compare it with 'discussions with the US on making bitcoin a strategic reserve currency.' The subsequent story is well-known; based on the recent peak price of bitcoin, the German government's missed profit from 'selling off' bitcoins has expanded to $2.03 billion.
In late July, Ari Paul, founder and CIO of BlockTower Capital, stated that the news of 'the US government planning 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, it does not mean they are actually 'building a Bitcoin Strategic Reserve.' This was also the mainstream view in the market at the time, with many believing that Trump was more expressing a 'crypto-friendly attitude' to gain support from crypto voters rather than genuinely wanting to establish a Bitcoin Strategic Reserve.
However, this situation quickly turned around—Trump's clear statements at the Nashville Bitcoin Conference at the end of July sharply contradicted many market participants.
Quoting from the speech transcript of Trump's Bitcoin Conference: 'We will establish a Bitcoin Strategic Reserve and fire Gary Gensler.'
If cryptocurrency is to define the future, I hope it is mined, minted, and produced in the US rather than elsewhere. If bitcoin is to go to the moon as we say, I hope America leads this trend... I am proud to be the first major party candidate in US 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. I will immediately establish a presidential advisory committee on bitcoin and cryptocurrency upon taking office.
Bitcoin does not threaten the dollar. The actions of the US government are the real threat to the dollar. The danger to our financial future does not come from cryptocurrencies but from Washington, D.C. It stems from trillions of dollars of waste, rampant inflation, open borders, and providing benefits and free healthcare to millions of illegal immigrants flooding 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. The value of every dollar has been rapidly 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 US will become a globally recognized powerhouse in bitcoin mining.
The federal government holds nearly 210,000 bitcoins, accounting for 1% of the total supply. However, for a long time, our government has violated a basic principle known to every bitcoin enthusiast: 'Hold, don’t sell.' Right? How can I understand this? Never sell your bitcoins.
The federal government holds nearly 210,000 bitcoins, accounting for 1% of the total supply. If I am elected, my government policy will be that the US 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 figures have begun engaging with the Trump administration; the previously confirmed 'national bitcoin strategic reserve' naturally resonates with countless individuals in the crypto industry.
At the end of July, Senator Cynthia Lummis proposed the Bitcoin Act of 2024, calling for the 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 US Treasury funds to purchase bitcoins corresponding to the amounts allocated for gold by the US Treasury; within less than 48 hours, the relevant American senators received over 2,200 letters urging them to jointly propose and support Lummis's 'Bitcoin Strategic Reserve Bill.' Previously, Lummis had also stated, 'The US national debt has reached $35 trillion, and the Bitcoin Strategic Reserve could stop this runaway train and help future generations pay off the national debt.'
In early August, Trump mentioned in an interview that bitcoin could be used to repay the US government's national debt of up to $35 trillion and avoid an impending debt crisis. His exact words were: 'Maybe we will pay off $35 trillion of national debt with a little cryptocurrency check, right? We will give them some bitcoin and erase our $35 trillion.'
It is evident that at that time, Trump had made preliminary plans for the 'use' of the Bitcoin Strategic Reserve—using the steadily rising bitcoin price to repay the massive debts accumulated over time.
Star, CEO of OKX, and Michael Saylor, founder of MicroStrategy, also expressed their views on the US Bitcoin Strategic Reserve plan. The former believes that 'in the future, every central bank will hold a large amount of bitcoin reserves'; the latter regards the Bitcoin Strategic Reserve as another 'Louisiana Purchase moment' for the US (Note: Thomas Jefferson purchased the Louisiana territory for $15 million in 1803, nearly doubling the size of the United States, meaning that the US Bitcoin Strategic Reserve will be a significant step in the US's quest for bitcoin dominance), thus greatly elevating its historical significance.
After Trump won the US election in early November, Cynthia Lummis posted, 'The future is ₿right,' and 'We will establish a Bitcoin Strategic Reserve,' accompanied by the iconic 'Bitcoin until 100k laser-eyed avatar,' which, given bitcoin's price approaching $100,000, is undoubtedly quite prescient.
Cynthia Lummis's laser-eyed avatar
Considering the above information, along with Trump's approval of Musk establishing a DOGE government efficiency department, the US Bitcoin Strategic Reserve plan is not only a campaign declaration used to 'gain votes' but also a 'governing plan' prepared to alleviate the growing national debt pressure and curb inflation. After all, the arrow is on the string, and it must be released.
Undoubtedly, this move has been placed on Trump's agenda, and the next step to consider is—how will the Bitcoin Strategic Reserve be specifically implemented?
The US Bitcoin Strategic Reserve is underway: discreet advancement or grand implementation?
According to the Bitcoin Act of 2024 proposed earlier by Senator Cynthia Lummis, the main content of this bill is defined as—'Bitcoin Purchasing Plan':
The plan is to purchase no more than 200,000 bitcoins each year for five years, totaling 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 US government can hold a significant 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 bitcoins. Specific methods include re-evaluating the federal reserve's gold certificates to reflect the market value of gold, with the difference used to purchase bitcoins. Additionally, the bill plans to reduce the excess surplus funds of the federal reserve banks, using part of the savings for the bitcoin purchasing program.
According to the provisions of the bill, the bitcoins purchased by the government will be held for at least 20 years. During this period, these bitcoins cannot be sold, exchanged, or auctioned, unless used to repay national debt. After the initial holding period, no more than 10% of the reserves can be sold every two years. This rule is designed to ensure the long-term stability of the bitcoin reserves while providing some flexibility to respond to future economic needs.
On November 14, according to FOX News, Pennsylvania Republican Congressman Mike Cabell proposed the Pennsylvania Bitcoin Strategic Reserve Bill (Note: Pennsylvania is the first state to introduce legislation allowing for direct bitcoin purchases; the earlier legislation for individual transactions was the Bitcoin Rights Bill). This 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. Additionally, media reports state that 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 the 10% allocation would represent about $5.1 billion in bitcoin investment.
On November 17, Dennis Porter, CEO of the Bitcoin advocacy organization Satoshi Action Fund (SAF), 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 pension funds in the US, affecting the economic well-being of residents; although state governments cannot control the federal monetary supply and macroeconomic policies, they have a responsibility to protect the fiscal health of their states.
As an anti-inflation asset, bitcoin's market value has soared to over $1 trillion in the past 16 years, being widely accepted as a currency and can also be seen as an inflation-hedging asset. The bill mentions that states should use bitcoin to guard against inflation.
State treasurers 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 shall not exceed 10% of the total funds in the account.
The acquired digital assets should be held in one of the following ways: A. The state treasurer holds them directly using secure custody solutions; B. Held by a qualified custodian 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, the treasurer may use the digital assets for loans to generate additional income through rules.
Combining the relevant cooperation discussions between Commerce Secretary Howard Lutnick, nominated by Trump, and Tether, we can briefly summarize the execution methods of the US Bitcoin Strategic Reserve plan as follows:
The US government officially intervenes: using Federal Reserve and Treasury funds for 'massive market purchases,' this method is the most radical, hence relatively low in probability;
Each state conducts its own actions: Just as Pennsylvania has initiated a trend of state treasury fund investments, SAF is negotiating similar legislation with ten other states, thus holding moderate probability;
The US government already has bitcoin holdings + collaborative reserves in the cryptocurrency industry: This path can lay the foundation for the Bitcoin Strategic Reserve by combining the government’s existing holdings of over 200,000 bitcoins and can set the tone for friendly regulation and industry development in the future, making it a higher probability path.
Nevertheless, if Trump wants to genuinely push for the Bitcoin Strategic Reserve to become a reality, he still faces some intuitive challenges.
The boulders blocking the path to the 'Bitcoin Strategic Reserve': time, law, and market.
In simple terms, the main issues that need to be resolved on the path to the Bitcoin Strategic Reserve include the following aspects:
Time cost: 100 days or longer?
Republican Senator Cynthia Lummis stated she hopes 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, with the 100-day timeframe roughly around the end of April 2025).
Analyst PlanB shared his speculation about the bitcoin market trend in the coming years in September, mentioning that:
In November, Trump won the election, ending the Democratic Party's suppression of cryptocurrency by Biden/Harris/Warren/Gensler, and bitcoin surged to $100,000... By April 2025, Trump and the US will begin establishing a strategic bitcoin reserve, with the bitcoin price rising to $400,000; in May, other countries (excluding the EU) will join the competition, and the price will reach $500,000; from July to December: FOMO drives bitcoin prices to new historical highs, reaching $1 million.
It is worth mentioning that the earlier Bitcoin Rights Bill planned to submit to the Republican-led Senate for review in the coming weeks. If passed, it would then be submitted to Wyoming Governor Josh Shapiro for signing, while voting resolutions and implementation at the national level will undoubtedly take much longer.
Legal obstacles: The power struggle between the US president and the Federal Reserve.
Undoubtedly, the previous 'power struggle' between Trump and Fed Chair Powell will also affect whether the Bitcoin Strategic Reserve plan can proceed smoothly, after all, the Federal Reserve, as 'America's purse,' holds a transcendent status.
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 of this year, Trump emphasized in an interview, 'If elected again in November, I will not appoint Jerome Powell as the Federal Reserve chair.' According to previous reports, Powell's term as Fed chair is set to end in May 2026. After Trump's election victory, the Wall Street Journal reported that if Trump attempts to fire Fed Chair Powell, Powell is prepared to engage in legal battles.
Market barriers: general skepticism mixed with hope
Mike Novogratz, CEO of Galaxy Digital, previously expressed skepticism about President Trump's proposal to establish a Bitcoin Strategic Reserve, stating that he does not believe the dollar needs the support of assets like bitcoin, but the US should enhance its bitcoin reserves to demonstrate its commitment to becoming a technology-oriented nation.
Jennifer J. Schulp, Director of Financial Regulation Research at the Cato Institute's Center for Monetary and Financial Alternatives, also stated: 'This still puts government money at stake, and bitcoin has not demonstrated itself to be a particularly stable asset. The bill requires senators and congressional representatives to gain greater confidence in its long-term viability, which they may not understand so well regarding cryptocurrencies.'
Anthony Pompliano, founder and CEO of Professional Capital Management, stated, 'Trump's level of support for bitcoin is enough to redefine how the US treats the cryptocurrency and digital asset markets. We have a president who strongly supports bitcoin and promises to protect the rights of bitcoin users. This pioneering move will change the economic policies of the White House. Trump holds bitcoins and intends to create a strategic reserve for the US, which is a significant flag.' He also predicts that this reserve will be established within 100 days.
For more interpretations on challenges, refer to previous analyses by the Economic Daily—(To truly make bitcoin a national reserve asset for the United States, several 'hurdles' still need to be overcome).
Of course, the Bitcoin Strategic Reserve is not without its supporters; asset management giant VanEck has cast a favorable vote. Previously, VanEck's digital asset research director Matthew Sigel stated, 'VanEck supports the Bitcoin Strategic Reserve. We do not need to cite 'insiders'; we will announce it ourselves.'
Regardless of when the US's actions come to fruition, the clarion call for the 'national-level competition' of the Bitcoin Strategic Reserve has already sounded.
The future of the Bitcoin Strategic Reserve: a national-level 'crypto arms race'?
In early November, Bitcoin Magazine reported that German MP Joana Cotar stated, 'If the US purchases bitcoin as a strategic reserve, I believe all European countries will experience FOMO.'
Around November 12, Dennis Porter, founder of the Satoshi Action Fund, 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' among sovereign nations and governments has already begun. Additionally, he believes that 'market participants believe that President Trump will honor his campaign promise to establish a Bitcoin Strategic Reserve, which aligns with the best interests of the United States and can prevent being surpassed by other countries. The global bitcoin competition is underway. 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 cannot simply dig more from underground.' He explained that the competition to adopt bitcoin is primarily driven by currency depreciation, noting 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 the speech of MicroStrategy founder Michael Saylor and mentioned, 'An excellent speech worth listening to. Thanks also for the support for 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.'
On November 21, macroeconomic expert Mark Moss, host of the Bitcoin podcast (Mark Moss Show), stated that Trump positioning himself as the 'Bitcoin president' may promote the US adopting a strategic bitcoin reserve, which will 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 and plans to increase the purchasing of 200,000 bitcoins annually until the holdings reach 1 million. Under Trump's leadership, this plan is 'very likely' to become a reality; 'if the US does this, G7 and G20 countries will be affected... Other countries have already begun to pay attention to this matter and started purchasing bitcoin, which brings significant upward momentum to the bitcoin price.'
It is evident that under the dual pressure of inflation and interest rate cuts on the dollar, bitcoin has become a 'solution' with great expectations, similar to the former 'Bretton Woods system,' and this is also a 'slow step-by-step race.'
Conclusion: Bitcoin is not the goal but the means; monetizing debt is the key.
As of November 25, the prediction market Polymarket, which successfully predicted Trump's election as president, has attracted $845,000 in betting funds on the event 'Trump will establish a Bitcoin Strategic Reserve within 100 days of taking office.' Currently, the probability of this event is estimated at 30%, which has decreased by about 30% compared to the high probability observed after Trump's election on November 7, reflecting a cooling of market expectations regarding this matter.
However, at the end of the article, I want to emphasize again that the essence of the Bitcoin Strategic Reserve is not simply about hoarding bitcoins. Holding a larger quantity of bitcoins is unlikely to provide a quick relief for the US's staggering $36 trillion national debt. After all, just as 'distant water cannot quench a near thirst,' 'slow money cannot cure an urgent illness.' However, once bitcoin is considered at the 'national fiscal level' and used to 'monetize debt,' that is, gradually using rising cryptocurrencies to pay off medium and long-term debts, it may become a 'remedy' prepared by Trump and his cabinet members for the US economy.
As for the efficacy, whether it is a cure or a terminal illness, time will tell.
