US president Donald Trump has named the crypto currencies/assets to be included in the nation's strategic reserve: on top of the original crypto currency Bitcoin (BTC), its competitor Ethereum (ETH), Solana (SOL), XRP and Cardano-ADA will be part of the reserve.
A reserve is an official stockpile of for example oil, that can be used in times of supply disruption, or a national crisis, to stabilise markets. The role of crypto currencies paid for with public money in reserves is new and untried, and not universally accepted as a good idea.
Looking at the less well-known currencies in Trump's proposal, Solana was established in 2020 and its perceived value has fluctuated wildly as the FTX exchange collapsed, the currency suffered a hack, and its backers were hit by legal actions.
Meanwhile, XRP has been around since 2012, and been embroiled in a legal stoush with the US Securities and Exchange Commission over what it should be classified as; Cardano-ADA? That crypto was launched in 2017, after its creator Charles Hoskinson fell out with Ethereum's Vitalik Buterin over commercialisation.
Has the official US support sparked a crypto currency boom? Reports from US media suggest the entire crypto sector has received a boost from Trump's proposal, but whether or not it will last remains to be seen.
Bitcoin lifted from below US$79,000 per unit on March 1, US time, and climbed towards US$95,000 in perceived value, but since then the crypto currency has again dropped. As of writing, it's listed at below US$86,000 per BTC.
Ethereum followed a similar pattern of a rapid spike and drop in value.
Where will the crypto currencies for the US stockpile come from?
The United States appears to hold 198,109 BTC presently, much of which comes from government seizures while pursuing criminal activity. In 2021, the US seized 50,676 BTC from James Zhong, who pleaded guilty to hacking the Silk Road online marketplace on which multiple illegal substances and activities were traded.
As a related aside, other governments with seemingly large BTC holdings include China (190,000), UK (61,245), Ukraine (46,351), Bhutan (10,635) and El Salvador (6095). The latter two nations have made big national bets on crypto currencies, with El Salvador having a national reserve of BTC.
At one stage, El Salvador's crypto friendly regime tried to make BTC legal tender in the South American nation, but had to scale that back to optional use after the International Monetary Fund frowned upon the idea.
If the US takes its current hoard of seized Bitcoin and kickstarts its reserve with the crypto currency, it will presumably mean that there forfeited funds will not be auctioned off, with proceeds distributed to victims, for example.
How exactly the crypto reserve would be set up is not clear at this stage. One reported proposal by Republican senator Cynthia Lummis who holds 5 BTC involves a bill that would require the US Treasury to buy 200,000 BTC over five years.
This would seem to indicate a total US Treasury Bitcoin hoard of 398,109 eventually, should the reserve creation plans go ahead.
The purchases would be funded through Federal Reserve bank deposit and gold holdings profits, and the Bitcoin reserve would be maintained for a minimum of 20 years. How much of other crypto currencies, including the popular Ethereum, would be bought is up in the air currently.
Lummis envisions the BTC holding as a way to cut US debt in half in 20 years, and to protect America against inflation and keep the dollar strong. Which would be quite a feat for an instrument that has no intrinsic value, and is very volatile.
Standard Chartered Bank has suggested BTC will rise to US$500,000 to the US dollar before 2028, as America's crypto friendly official policies boost the market. That would give BTC a "market capitalisation" of over US$10 trillion.
However, if the US government embarks on a large-scale purchase of crypto currencies, it is likely to affect the price of these as well. Selling off large holdings of crypto currencies as part of a reserve would do that as well, which would seem to run counter to the notion of perceived value increase.
The $TRUMP memecoin linked to the US president was launched just before the January inauguration and spiked at nearly US$74 to the US$. It has since dropped massively in value, to just under US$13 as of writing. However, $TRUMP rose substantially briefly, on news that the US president would create a crypto currency reserve. There is no indication currently that $TRUMP will be part of the US crypto currency reserve.
7 Comments
IMHO it has to provide a boast with that amount of purchasing power
HODL HODL ?
Probably the most volatile market activity ever seen in the crypto space over last few days. Deep in the degen dungeons, the carnage will be extreme. People down to their last breath and hunting for physical coins in the sofa.
Well not only do I not understand crypto, I do not even understand the comments. :)
HODL, BradJ, refers to the crypto holder who holds it as an investment rather than a means of exchange - it was a misspeeling of "HOLD" and now has also become the acronym HODL = (Holds On or Dear Life).
https://cointelegraph.com/news/75-percent-bitcoin-hodled-6-months-hodl-…
"The findings come from Glassnode’s HODL wave chart, which uses blockchain data to give a macro view of Bitcoin is held in wallets based on the time since it last moved.
The data shows around 74% has been stationary for most of 2024..."
Cheers
Col
To understand what a technofeudal version of the original giant Dutch tulip-style Ponzi scheme cryptocurrencies are, we first have to understand the difference between money and credit. It then becomes clear that they are nothing more than credit on credit - IOW two layers on top of one another, with both carrying outrageous counterparty risk.
This distinction between money and credit was defined in Roman law back in 450BC - the essence of which as I interpret it -
(i) Real "money" is something used to settle a transaction immediately, and where there are no third parties involved and no counterparty risk - the payment is made with a hard item (usually gold or silver) which is a store of value and a reliable and stable benchmark of goods or services rendered.
(ii) Credit is something which is merely promised as a settlement, and there is always the other side to that promise - the debt that is someone else's asset in the simple double-entry book-keeping system that dates back through the ages. Any currency or payment that lacks the transfer of an intrinsic physical value has this built-in counterparty risk.
Trump's scheme stinks to high heaven on multiple levels - his chicanery is a blatant example of monetising position and power, with his meme-coin con being particularly obscene.
Given there are estimates of more than 20,000 cryptos in existence, that in itself provides the industry with a huge challenge.
So too, the very name of the so-called creator of Bitcoin is beyond suspicious...
Satoshi can be tranlated into the word "intellgence"
Nakamoto can mean "central"
TPTB love to play games with humanity - to me, Bitcoin is just another Ponzi - another liquidity sink to divert capital away from gold and silver as part of a manifold attempt to mask the plummetting purchasing power of the current fiat currencies.
The brief 50-year experiment in fiat currencies with no physical backing has gone horribly wrong and the Basel III (January 1 2023) designation of physical gold as a Tier 1 balance sheet asset, announced that the global central banks were unceremoniusly throwing ALL fiat currencies under the bus. Two countries, the U$ and the UK, continued to bet the farm against gold and they are going to pay an enormous price for their wrong call.
IMO the crypto-currencies idea, in terms of holding them as a govt reserve, is swimming against the tide as the global financial system moves towards sound money initiatives. Humanity is moving on into a multipolar BRICS/BRI reality of mutual financial/security cooperation between all members, in a novel non-predatory global socio-economic paradigm.
Trump can burble on about this new Ponzi idea, and how he has almost singlehandedly slain the BRICS dragon, but it won't make a jot of difference. As the old Bedouin saying goes the dogs (Natostan) bark, but the caravan (BRICS/BRI) moves on.
Cheers to all
Col
TPTB love to play games with humanity - to me, Bitcoin is just another Ponzi - another liquidity si Bnk to divert capital away from gold and silver as part of a manifold attempt to mask the plummetting purchasing power of the current fiat currencies.
Not sure what your benchmark is for Ponzi as I personally feel that BTC can't be created out of thin air make it more of an anti-Ponzi. Now, because its fiat price can go up on increased demand for falling 'market supply', of course it can resemble tulip mania. But I think it's important to think that price dynamics also reflect the weakness in fiat itself. F'more, until recently and maybe still the case, the gold and silver markets have been controlled like a puppet on a string. The ruling elite has been able to suppress the price on a whim. It has less power to do that with BTC. And of course, BTC has other properties that gold and silver do not.
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