Bloomberg does not understand what objectives this initiative will serve. When it comes to ordinary strategic reserves, such as oil, it is done to support the economy and protect the country's interests. The Bitcoin reserve has no such purpose, the editorial article points out.
“Bitcoin cannot find industrial application, it does not claim to have real cash flows and is not tied to the real economy. It is purely a speculative instrument. Its price entirely depends on how much a bigger fool is willing to pay,” writes Bloomberg.
The editorial team fears that spending taxpayer money on Bitcoin could lead to significant losses. If the reserve were funded by the government, it would have to do so at the expense of increasing national debt or printing new money, which would stimulate inflation and weaken the US dollar. Considering that Bitcoin is extremely volatile and has no real intrinsic value, the government reserve could devalue, and hundreds of billions of taxpayer dollars could simply evaporate, Bloomberg argues.
The article also notes that if banks and other financial institutions are willing to accept Bitcoin as collateral, a sharp decline in the cryptocurrency's value could lead to financial collapse. Therefore, the mass adoption of Bitcoin at an institutional level is very risky for the government. It may only enrich current Bitcoin holders.
Recently, Bloomberg analyst Lionel Laurent questioned MicroStrategy's strategy of purchasing Bitcoin through debt financing. According to the analyst, this plan is flawed and unviable.
