With the 2024 US Presidential election behind us, we can now turn to what is going to get done once the new Administration is in place.
One thing that was talked about on the campaign trail is the United States adding Bitcoin as part of its strategic reserve. While I tend to not give much weight to promises made during campaigns, this is one where action might be taken.
Cryptocurrency is penetrating the mainstream. It was certainly a topic during the election season. Over the last couple years, members of the US Congress were starting to be divided between pro and anti crypto.
Cynthia Lummis of Wyoming is one of the pro-crypto Senators.
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The US Government Will Add Bitcoin To The Strategic Reserve
This is my prediction since it is something that seems pretty straightforward.
The aforementioned Lummis has put forth bills in the past which included the US Government owning Bitcoin. Some of the ideas stem around the accumulation, over time, of roughly 1 million BTC, then hold it for a 20 year period.
Naturally, the makeup of the exact parameters will be hotly debated.
However, it is something that I can see becoming a reality. My presumption is that it only requires passing both Houses of Congress and being signed by the President. I have no idea how pro-crypto the new Congress will be. That said, it did appear there were a lot of advocates during the campaigns.
There are already rumblings about other countries frontrunning the United States on this one.
My prediction comes from the view that governments around the world are going to accumulate Bitcoin. El Salvador is not going to be the only one diving into that game. For this reason, the United States is will not want to get left behind.
It does appear to be something that will not have a great deal of pushback. After all, the way the US Government spends money, buying some BTC is probably a welcomed expenditure (although it is an investment).
The Impact on Bitcoin
People who are involved with Bitcoin has reason to be bullish. The math on this one is fairly easy.
Bitcoin is fixed money. That means there is a cap of 21 million. Accumulation over time means that one is enhancing stake against the total. If the USG does acquire 1 million Bitcoin, this would be just shy of 5%.
We already have firms like Blackrock acquiring significant amounts based upon the inflows to its ETF. Microstrategy is adding.
My guess is that we will also see central banks get into the game, adding Bitcoin to their balance sheet.
All of this means the price of BTC is likely going to head higher. The US Government will be acquiring as asset that has scarcity, while having the ability to drive demand higher. Implementation of this will force other entities to follow.
This means that the USG will actually enhance its holdings. If it gets 1 million Bitcoin, and we see the price head to $1 million as some forecast, we are looking at $1 trillion on the balance sheet for the United States. Cathie Wood is one person who forecasts this by 2030.
Who knows where the value might be in 20 years.
Rigged Game
This is a foolproof plan.
The reason I say this is we are looking at a rigged game. As always, who cares if it is rigged as long as we know how it is.
We have two important components. First, we are dealing with a fixed supply, hence the scarcity part of the equation. Next, we have the biggest manipulator in the world looking to get involved.
If we think The Fed has the ability to influence markets, just wait until the USG and Treasury get involved.
What will happen is the tentacles of this action will stretch far and wide. Not only will other governments look at this in a similar fashion but also companies. Basically, the USG is putting a floor on Bitcoin.
Essentially, it would become law that the USG would have to acquire roughly 5% of the total Bitcoin. There is nothing to guess about.
With so much discussion about the plight of the financial future of the US, this is a way to temper it some.
My forecast is we see this happen, and relatively quickly after the new Congress is seated.