Author: Denis Mwirigi
Former U.S. President Donald Trump’s proposal for a national Bitcoin reserve has generated a new wave of interest and debate. This audacious initiative forms a cornerstone of his campaign strategy as the modern finance landscape continues to take shape.
The proposal aims to reshape America’s stance on digital assets, potentially affecting Bitcoin’s future price and supply. It would also cement Bitcoin’s position as a “strategic asset” within the country instead of a digital asset of the crypto community and decentralized economy advocates.
Donald trump said he will creat America 🇺🇸 bitcoin stockpile state
American Reserved digital Asset. pic.twitter.com/upNkVQIF56
— anilsingta (@anilsingta) October 27, 2024
Trump’s Bitcoin Vision: A Strategic National Reserve
Recently, Trump introduced a financial plan to his campaign, proposing to form a “Strategic National Bitcoin Stockpile.” His promised administration will hold and buy Bitcoin as an important, long-term national asset. According to him, the stockpile will act as a strategic financial reserve, just like the country’s national gold reserves.
Trump declared, “If elected, it will be the policy of my administration to retain 100 percent of all the Bitcoin that the U.S. government currently holds or acquires into the future.” This aligns with his plan to build economic resilience via digital asset ownership. This proposal in his election campaign also appeals to demographics interested in cryptocurrencies and finding solutions to inflation.
The U.S. government is already one of the world’s largest owners of Bitcoins, primarily confiscated as forfeitures from illicit activities and lawsuits, such as the Silk Road shutdown. Currently, the assets are under the U.S. Treasury and amount to roughly 1% of the total Bitcoin supply.
If So, What Happens? Implications for Bitcoin’s Scarcity and Price
Assuming Trump wins the 2024 U.S. elections and implements this plan, several market dynamics come into play. The proposal for such a stockpile excites crypto market analysts and enthusiasts who understand its effect on Bitcoin’s price. The supply of Bitcoin is capped at 21 million coins, of which about 19.7 million have already hit the market. If the U.S. government were to hold a sizeable amount of Bitcoin in the long term, the available supply in the market would be reduced, thereby increasing the asset’s scarcity.
Earlier on Reuters, Mark Connors, global macro at Onramp Bitcoin, said the move could make Bitcoin’s price more stable, particularly if governments treat it as a core reserve asset. “We’ve never had such a limited supply commodity, albeit digital, assume a new state of a reserve asset,” Connors said. His words hint at bullish implications for Bitcoin’s future value amidst the heated election campaigns.
However, several concerns arise from Trump’s plan. Critics say this would put too much control of Bitcoin into the government’s hands and work against the cryptocurrency’s decentralized philosophy. If the government were to start selling off parts of its reserve, that could bring volatility into the Bitcoin market and affect private investors. But to many in the crypto industry, this plan marks a breakthrough in accepting Bitcoin as a valid store of value, much like gold.
A New Trend? Bitcoin and the U.S. Election Landscape
Trump’s Bitcoin initiative is the latest evidence of a significant campaign agenda between political parties. Government-held Bitcoin reserves are advocated for by Senator Cynthia Lummis and Robert F. Kennedy Jr., among others, with Lummis proposing the acquisition of as many as one million coins.
This trend validates Bitcoin’s growing viability as a hedge against inflation. Investors and Crypto enthusiasts expect a bullish rally as the elections approach, and the presidential candidates unveil new financial strategies. Meanwhile, this plan could help Trump capture crucial crypto-friendly voters while redefining financial policies and national reserves ahead of the 2024 election.
