Bitcoin as a Reserve Asset of the United States Government?

Summary

In this article, I cover the groundbreaking announcement made by two presidential nominees at the Bitcoin Conference, explore the implications for the crypto market, and discuss the changing landscape of cryptocurrency adoption in the US and abroad.

The Big News

On July 27th at the Bitcoin Conference held in Nashville, Tennessee, both Donald Trump and Robert Kennedy made a significant declaration: If elected president, they would not only embrace cryptocurrencies but also add Bitcoin to the US treasury as a reserve asset. This momentous statement has far-reaching implications for the crypto sector.

RFK Jr. arguably gave the more bullish of the 2 speeches, vowing to buy 550 bitcoin per day until the US had accumulated ~4m bitcoin or roughly 20% of the total supply.

What's The Impact On Price?

Michasel Saylor took to this stage to answer this question (video here). Currently, Bitcoin represents about 0.1% of the $900T+ value of global assets.

Should the share of global assets invested into bitcoin reach 2%, we could be looking at a bitcoin price of $3M in Michael's bear case forecast and up to $49M per coin in his bull case forecast. I'm not sure I personally subscribe to those numbers, but it's not illogical to think that bitcoin could capture between 1%-5% of global assets.

Political Rhetoric vs. Action

While the announcement is groundbreaking and exciting for many bitcoin holders, advocates must remain cautious. Political promises during election campaigns often differ from actual policy implementation. As we approach the US November elections, time will reveal whether these statements translate into tangible actions.

Why The Political U-Turn?

Approximately 52 million Americans currently hold or have invested in Bitcoin and other cryptocurrencies. Consequently, the stance on crypto could significantly influence the election outcome. An anti-crypto position may not only fail to win votes but could also sway them toward a candidate who openly supports Bitcoin and crypto. The Democratic party, led by Kamala Harris, faces the challenge of appealing to young crypto holders, especially after years of regulatory scrutiny, de-banking of crypto companies (such as Operation Chokepoint), and crypto litigations led by figures like SEC Chair Gary Gensler and Senator Elizabeth Warren.

Solana's Rising Tide

Despite past hurdles, the tide seems to be turning in favor of boarder crypto adoption in the US outside of just bitcoin. Ethereum’s successful ETF launch, coupled with the SEC dropping its lawsuit regarding Ether’s classification as a commodity rather than a security, signals progress. A noteable challenger to Ethereum's normal dominance in what has been called the De-Fi sector is Solana. Solana has surpassed Ethereum in 30-day decentralized exchange volume (DEX volume) which is quite significant given that at current prices, it only has ~20% of Ethereum's $400B market cap.

Action Overseas: MetaPlanet

Notably, MetaPlanet, a Japanese equity, has become the best-performing stock in Japan following its adoption of Bitcoin as a treasury reserve asset. This move underscores the growing acceptance of cryptocurrencies beyond speculative trading and investment, and its potential use case as a treasury reserve asset. The move is a copycat of the treasury playbook used by Microstrategy to buy 226,331 bitcoin by leveraging it's stock to take out extremely cheap long duration debt.

In Closing

The rapidly shifting political narrative, is shifting regulation towards bitcoin and cryptocurerncy adoption. It cannot be underestimated how much of an impact Bitcoin being adopted as a US treasury reserve asset could have and I expect to see more companies and countries adopting bitcoin as an asset in the future.

A Quick Update On BlockByte

Over the last several weeks I've been testing some new offers for both individuals as well as companies inerested in investing in and being consulted about bitcoin & cryptocurrencies.

We're currently working on bringing our new BlockByte site and services live in the coming week.

If you have any questions or feedback in the meantime, please reach out.