Recent Bitcoin price volatility, including a drop below $50,000, has raised doubts about the viability of a proposed federal Bitcoin strategic reserve, advocated by politicians like Donald Trump and Robert F. Kennedy Jr. Experts, including Cerus Markets CEO Michael Brescia, argue that Bitcoin's high-risk nature makes it unsuitable for national reserves, which aim to ensure economic stability.
While supporters claim Bitcoin's scarcity offers a better hedge against inflation than traditional assets like gold and silver, critics emphasize that these traditional assets provide greater stability and have historically strengthened the U.S. economy. Currently, Bitcoin's price has fallen 27% from its March 2024 peak of $74,000, contrasting with 20% and 22% increases in gold and silver futures, respectively.
Although interest in a Bitcoin reserve is growing, including a bill from Senator Cynthia Lummis, the proposal faces significant opposition and is unlikely to succeed. Brescia concludes that Bitcoin's current volatility and size—only about one-fifteenth that of gold—render it impractical for national reserves at this time.
