Strategic Bitcoin Reserve

Strategic Bitcoin Reserve Now Reality

The U.S. Strategic Bitcoin Reserve was confirmed last Thursday by executive order and will be capitalised by Bitcoin ONLY on behalf of the U.S. Federal Government.

With the U.S. Federal Government’s seal of approval, Bitcoin’s status as a legitimate asset has been solidified. Establishing the Strategic Bitcoin Reserve further distinguishes it from the digital asset stockpile.

The announcement couldn’t have been better for bitcoin.

Congress will likely be responsible for acquiring Bitcoin in the future. That is how it should be.

In addition, the Secretaries of the Treasury and Commerce are now authorised to develop budget-neutral strategies for acquiring additional bitcoin, provided these strategies do not increase American taxpayers’ costs.

In effect, they can reallocate existing funds to add to the Strategic Bitcoin Reserve.

‘Selling the news’ on Strategic Bitcoin Reserve announcement

That said, the announcement didn’t stop the market from selling the news, presumably because they viewed it as bearish. Bitcoin sold off $5k before recovering and settling at $88k.

While accepting that current sentiment is poor, it’s difficult to see why anyone would see the announcement as bearish.

The only possible reason is that the announcement didn’t mention that the U.S. Government was actually purchasing Bitcoin at that point.

While clearly, the Secretaries of the Treasury and Commerce can’t use the general account of the federal government to buy bitcoin on the open market, once they have assets to convert into bitcoin, they are authorised to do so if that makes financial sense.

No one in their right mind would want the U.S. to print more money and run up the national debt to buy more Bitcoin.

The executive order outlines the most pragmatic, measured, and responsible way to fund a Strategic Bitcoin Reserve.

Digital gold

The executive order references Bitcoin as a store of value and digital gold.

By endorsing bitcoin as a store of value at the federal government level, the executive order provides a strong vote of confidence in this digital asset.

That is a significant development for Bitcoin.

It validates bitcoin as an asset and gives air cover for institutions, pension funds, etc., to allocate bitcoin to their portfolios. Blackrock has already taken this step and now recommends an allocation of 1 to 3% in their model portfolio.

With the U.S. leading the way, expect other sovereign nations to swiftly follow suit, confirming their own Strategic Bitcoin Reserves.