Don’t blindly Cheer for a Bitcoin Strategic Reserve — Crypto Exec

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Establishing a nationwide Bitcoin (BTC) strategic reserve might create unfavourable market impacts for BTC and the US greenback, in keeping with Haider Rafique, international managing accomplice for presidency and investor relations at crypto trade OKX.

Rafique instructed Cointelegraph that any authorities holding significant portions of the BTC supply may manipulate costs by dumping its holdings onto the market, thereby disrupting the core proposition of BTC as impartial, decentralized cash. 

He requested: “What occurs in a number of years if a brand new administration decides this was a foul thought?” Rafique added:

“Regardless of latest bipartisan help for crypto, it’s important to keep in mind that administrative insurance policies can change rapidly. As circumstances change over time, the focus of enormous quantities of BTC on a rustic’s stability sheet may characterize a liquidation danger.”

Bitcoin Regulation, US Government, United States, Bitcoin Adoption, Bitcoin Reserve
A breakdown of nation-state publicity to Bitcoin. Supply: Bitcoin Policy Institute

The German authorities was an instance of this in 2024 when it unloaded 50,000 BTC, which stored costs suppressed beneath the $60,000 degree, Rafique mentioned.

The Bitcoin strategic reserve continues to be top-of-mind for a lot of Bitcoin advocates, who say that establishing such a nation-state-level BTC treasury is the following step to making Bitcoin the global reserve currency and the usual financial unit of account.

Associated: US lawmakers tap Saylor, Lee to advance Bitcoin reserve bill

Dangers to the US greenback and different monetary markets

Establishing a Bitcoin strategic reserve may create a contagion that wouldn’t simply be restricted to crypto markets and would have widespread macroeconomic results, Rafique instructed Cointelegraph.

“Essentially the most important macroeconomic implication can be a lack of confidence within the greenback,” he mentioned.

Constructing a Bitcoin reserve alerts that the US greenback, which underpins the worldwide economic system, is weak and can’t maintain its worth on financial energy alone, he added.

This might ship shockwaves by way of your entire monetary system as traders flee the US greenback for safe-haven property akin to gold or the Swiss franc, Rafique mentioned.

Traders would additionally dump risk-on property, making a cascade of liquidations throughout monetary markets that will probably culminate in a big crash, as markets reply to the seismic shift in international finance, he concluded.

Journal: US risks being ‘front run’ on Bitcoin reserve by other nations: Samson Mow