forbes.com ‘It’s Inevitable’—Bitcoin Price Suddenly Soars On Wild Rumors Donald Trump Will Create A U.S. Bitcoin Strategic Reserve Jul. 21st, 2024 Bitcoin Bitcoin 0.0% has exploded back to life this month as traders bet former U.S. president Donald Trump will trigger a bitcoin price boom. Now, wild rumors are swirling that Trump could announce he'd create a U.S. bitcoin strategic reserve during his much-hyped appearance at the Bitcoin 2024 conference in Nashville next week—something that could trigger a bitcoin price "instant moon." "There is speculation that Trump may announce the establishment of a U.S. bitcoin strategic reserve during the Bitcoin 2024 conference in Nashville," Markus Thielen, the chief executive of institutional-focused analysis company 10x Research, said in an emailed note to clients that highlighted the bitcoin price rocketed almost 1,900% during Trump's first term. "The U.S. could strategically incorporate bitcoin into its reserves, diversifying its portfolio and reducing reliance on traditional assets like gold and foreign currencies," Thielen wrote, pointing to the the around 212,000 bitcoin that the U.S. government currently holds, worth around $15 billion, compared to its $600 billion worth of gold reserves. "Donald Trump may already be thinking about adding bitcoin to the U.S. balance sheet," Lark Davis, a bitcoin analyst and author of the Wealth Mastery newsletter, wrote to his subscribers. Earlier, Dennis Porter, the chief executive of the Satoshi Action Fund regulatory lobby group, posted to X that Trump will "announce a USA bitcoin strategic reserve in Nashville," citing unnamed, anonymous sources. "People don’t believe the USA could implement a bitcoin strategic reserve but at this point it is inevitable," Porter added. A strategic reserve, such as the U.S.'s strategic petroleum reserve, is a store of assets kept on hand and designed to either be deployed in emergencies or to guarantee debt. "Getting more and more confirmations that these rumors maybe true," Simon Dixon, founder of the BnkToTheFuture investment platform, posted to X. In response, Ari Paul, chief investment officer at crypto hedge fund BlockTower Capital, put the odds of the U.S. creating a bitcoin strategic reserve in the next four years at 10 to one, adding it's "plausible to me that Trump might say it, which would be very bullish for bitcoin medium time frame" and that if Wall Street "actually believed it would happen, then instant moon"—referring to a popular bitcoin meme that means the bitcoin price climbing rapidly. This week, Trump issued an invitation to attendees of the Bitcoin 2024 conference to a private fund-raiser that includes a near-$845,000 per person seat at a round table event, it was reported by Bloomberg. The fundraiser will be hosted by conference organizer David Bailey, it was reported by the Washington Post, who has repeatedly met with Trump and has said Trump's speech at the event will be "the most consequential political event in bitcoin’s history and a defining cultural moment for our society." Bailey's conference was also the stage for El Salvador's president Nayib Bukele to announce the country was adopting bitcoin as legal tender in 2021.
Frankly, spreading rumors like this is a bit too much for me to stomach. As before, Bitcoin fanatics are hard at work again to pump up the price.
I personally am shocked, and don't really trust Trump too much anyway, but if he has the right people talking to him, and enough people suck up to him, anything is possible. But lets really look at this logically. I've outlined this in another thread, but lets do it again here. What is the solution for the current state of trilema of debt, deficit, and interest rates? The debt is very high, and nothing like what Trump had in his first term. The deficits under the democrats are astronomical, $2T per year and counting. And the interest rates are crushing the budget, but everyone knows if they go substantially lower, its going to explode inflation. So my point is that how do you solve for this trilema? We need a solution now. Dropping taxes just makes the hole even bigger. If Trump so called "energizes" the economy to push GDP up, that is only really just inflation. There is no growth, and there hasn't been for a very long time. To get debt/GDP number down in a meaningful way, you need either the debt to drop 30% or GDP to go up 30%, both of which are really quite impossible. So there is no way to make this debt problem go away. About the only thing you can do is change the rules, and this means switch to some other system, some other way to measure, some other peg or backing. It just makes perfect sense that if the US has about 200k of bitcoins, plus about 900k in the ETFs, plus several hundred thousand more in US company balance sheets, the US is in a strong position to signal that we can use bitcoin to underpin the system. With Germany being so quick to sell 40k, it was almost a strategic play to ensure no other nation state has more than the US. With China banning bitcoin for so long, its also doubtful that it has any at the state level. So the best way to do a soft reset is to all of a sudden say that we will use something that nobody else has. This does make lots of people rich, but who cares if most of them are Americans anyway. The US comes out on top under a Bitcoin Strategic Reserve power play. Plus lets not forget the confiscation angle. The 900k bitcoins at the ETFs can be confiscated and the holders get dollars. Now the US adds another 900k to its holdings, and all of a sudden, the US is the largest holder of bitcoin to ever exist. If you don't like it, fine, but you need to suggest another solution for a problem that we are pressing right up against. With the economy right now doing horribly for most people, and about to get worse, and yet, even this requires $2T of deficits, what will you do next year? Tax cuts that stimulate the economy never create more tax receipts for what is lost. The printing will have to be insane to cover the holes, and lots of other people like Japan are working hard at selling their Treasuries, so how is the Fed going to dump a shit ton more on the market? There needs to be a solution right now, but no classical solution can work this time around because of the high debt, high deficit, high interest rates, and fear of renewed inflation. Its time for something new.
Only if everyone's motive was as patriotic as yours. Unfortunately, they just wanna fatten their greedy belly. Also I don't believe a fix can be found just by exchanging one form of fiat for another. Unless, we're able to change our spending habits altogether, we're never getting out of this debt (or death) spiral. At any rate, I too have made my opinion known elsewhere on several occasions so not worth regurgitating it again. You're more than welcome to add additional insight to the topic though.
I absolutely will add more insights. First, you call it exchanging one fiat for another which means you are very much behind the curve on what fiat is and how bitcoin is different. But no worries... most don't understand. I got this from a simple search.... Why is it called fiat currency? The word 'fiat' is a Latin word meaning determination by authority. For fiat currencies, value is determined by authorities like national governments and central banks. So Bitcoin is clearly not this. Nobody has authority over bitcoin, and the idea is that most people will choose to use bitcoin, and hence the government will have to get on board. The government can dictate to use fiat to pay your taxes, but if everyone only buys USD to pay taxes but keeps its wealth in bitcoin, and wants to be paid in bitcoin, government will not have any power. More and more people choose to use bitcoin, and I am a perfect example (right now, I only use it as savings). I didn't get on board until 2021, but I still beat out at least 95% of the population. More people are coming, and just like more people used Netflix over Blockbuster, the was is inevitable, and it will be like this for fiat currencies as well. The people will choose what they want to use and the government either slaughter's the population, which they do in some countries, or the government has to go with the will of the people. Bitcoin will force this change. Imagine how the economy would look if government couldn't print money. First, just the idea of how money comes into existence with fractional reserve banking is idiotic, but on top of this, you also have a government that can print it if the banks fail to make loans to create it, and the government also has unlimited ability to borrow money by issuing stupid bonds. Picture for a second that the world works on bitcoin. You get paid in bitcoin, so your employer has to somehow source it. Government runs on bitcoin, so it has to collect it from taxes. If it doesn't have it, it can't spend it. Who will lend the government money, (ie. their bitcoin), if it knows the government won't give it back with interest? Now imagine how any world problems can be solved with just a smaller government. This is exactly whats coming. Look at it like this. When we talk about fiat money, we talk about all this imaginary bullshit that people are forced to believe like MMT. If we talk about food, its obvious that this can't be manipulated. Either the food is there or it isn't. Either the harvest is good and there is enough wheat, or the harvest is bad and people need to ration. Either your stockpile is large and you can splurge, or your stockpile is low and you need to conserve. Money is actually easier to understand if you think of it like a finite resource with real world rules and implications.
Have you really thought this through? Do you really want to be paid in bitcoin the way it fluctuates? You have a limited number of bitcoin. You can't print anymore. How will the economy operate. If you lend me a bitcoin so I can buy a car or whatever I will have to pay you back with interest. Now if all 21 million bitcoins are lent out, (not unreasonable considering the size of the ecomony) where will the interest come from
Yes I have. The fluctuations will settle down when bitcoin reaches an astronomical value and the world runs on bitcoin. We are of course a long way off. Lending will still happen because the price of bitcoin stops going up like crazy. At that point, you figure that lending your bitcoin will be more productive than a tiny appreciation in price. Or, lending will fall out of favor. Maybe we all just need to save up to buy stuff we want like big ticket items. The price of everything today is manipulated because of how easy it is to print fiat money. Interest rates are also artificial. Do you think lending $1million should have only been a 3% a year cost given all that risk? Everything will end up having a price once we are on a hard money standard, and then we will all adjust. Of course to get there is a long road, and fiat will still exist, and I'm sure other cryptos as well, but I have learned that everything converges on just one best asset. Think of it like computers. You either use PC or Mac, with maybe a bit of Linux. With phones, its either Android or iOS. With internet, there is only one, the TCPIP protocol. Money will end up being just one protocol that will be global. In fact, money is the last thing that is in need of innovation. The move to the Euro was a small example. It made sense for the whole area to just use one currency. The next move is to one global currency that nobody can control, and that is bitcoin.
But that's what you were implying in your earlier post, that the only way out of the current mess is to adopt bitcoin as the FIAT. Or did I get that wrong?? The government and public will continue their spending binge, no matter what currency we use, be it USD or Bitcoin. Again, human nature doesn't change overnight.
Ah, I see the confusion. Yes, bitcoin will replace fiat, but not that the bitcoin would be fiat. We just have to go to Latin American countries to see what happens. With a 50% monthly inflation, you don't want to hold your Peso. It might be the official currency, but they want dollars. (a less worse fiat... LOL) So they apparently accept it, but have different prices based on if you pay in Peso's or dollars. Its a two tiered system. So going forward, if you know they are cranking up inflation in dollars, you don't want to hold dollars. You hold bitcoin. Then if you want to buy a high ticket item, you perhaps get a better price if you pay in bitcoin than in dollars. Clearly dollars aren't going anywhere, but already now most of us know not to hold $100k in USD. We either invest it and take a risk, or get out 5% guaranteed, or we hold bitcoin. But nobody, hopefully, is holding that much USD without at least some sort of yield. Now tell me what happens when they drop rates because government can't afford the $1T interest expense bill anymore. What if rates go back to 1%? Will anyone hold fiat with it not paying anything and inflation raging? How does government spend bitcoin it doesn't have? Government will of course always want to spend in dollars, but at some point, everyone will convert dollars to bitcoin right when they get them. The system will fall apart even before we get there. We need to find someone to but all the debt that needs to be rolled over first, and that ain't gonna be easy. And don't forget, Yellen needs to issue way more debt because of the $2T deficits. There is so much debt that needs to find a home. And if the Fed has to print money to buy it all, that is game over. My worry is that government puts us into depression before we get the raging bitcoin bull run. They might just go full austerity and protect the dollar and screw the economy and the citizens. This will keep the system going a little longer.
Suppose Bitcoin were to become a national currency tomorrow. USD is replaced by BTC and everything is priced in BTC. Do you really believe that would change anything? Moreover, do you think that would change people's spending habits? Most Americans (and Canadians) are shopaholics. They would much rather take out a loan to get something that they don't need than to be told shopping is bad for their financial welfare. After all, they've been doing this since the 80s. And that behavior ain't gonna change just by swapping USD for BTC.