Bitcoin (BTCUSD) surged to a new high of $108,262 on Tuesday, fueled by mounting optimism around President-elect Donald Trump’s potential executive order to establish a US Strategic Bitcoin Reserve. The bellwether cryptocurrency has rallied over 159% this year, breaking its own record multiple times since Trump’s election victory in November.
The excitement stems from reports that Trump is considering leveraging the Exchange Stabilization Fund (ESF) to create a Strategic Bitcoin Reserve.
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According to Dennis Porter, co-founder and chairman of the crypto advocacy group Satoshi Action Fund:
“I can confirm that Trump is exploring an Executive Order creating a ‘Strategic Bitcoin Reserve.'”
This reserve would incorporate seized Bitcoin already held by the US government, estimated at 213,297 BTC, worth over $22.6 billion at current prices.
MASSIVE BREAKING: I can confirm that my team has finalized a model EXECUTIVE ORDER for the president of the United States to establish a ‘Strategic Bitcoin Reserve’ pic.twitter.com/rz3issLf2H
— Dennis Porter (@Dennis_Porter_) December 17, 2024
Blueprint for Bitcoin Integration
The executive order, drafted by the Bitcoin Policy Institute, proposes allocating up to 2% of the ESF’s portfolio value for Bitcoin acquisitions during an 18-month pilot period. Additionally, it would discontinue the auction of confiscated Bitcoin, using the seized assets as the reserve’s foundation.
The proposed reserve would mark a shift in US financial strategy, aligning Bitcoin with traditional foreign reserves such as gold. Advocates argue that this move could hedge against macroeconomic risks and enhance the nation’s financial stability.
Rep. Cynthia Lummis (R-WY), a vocal Bitcoin proponent, has been instrumental in shaping this vision. Her earlier proposal, the “Bitcoin Act,” laid the groundwork for integrating Bitcoin into the national reserve framework. While her bill awaits congressional approval, the executive order could fast-track the initiative.
JUST IN: Bitcoin Policy Institute drafts Executive Order for a Strategic Bitcoin Reserve for President Trump pic.twitter.com/bxJHZKa8Ue
— Bitcoin Magazine (@BitcoinMagazine) December 17, 2024
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Crypto Market Impact
Bitcoin’s meteoric rise has buoyed the broader crypto market, lifting related stocks. MicroStrategy (NASDAQ: MSTR), a company renowned for its $45 billion Bitcoin holdings, saw its inclusion in the Nasdaq 100 index on Monday boost its stock by 7%.
During an interview with CNBC on Monday, MicroStrategy co-founder and executive chairman Michael Saylor reaffirmed that the incoming Trump administration was serious about creating a national Strategic Bitcoin Reserve while also stressing the importance of “buying the future,” stating:
“All the capital outside the US and all the 20th-century antiquated capital is going to flow into digital assets and the Bitcoin network. The logical thing for the US is to buy it now and own the future. The Bitcoin network is going to go up by a factor of 100. You might as well buy it before.”
My thoughts on solving the national debt, strengthening the USD, ensuring US economic leadership via a Digital Assets Framework & #Bitcoin Strategic Reserve, $MSTR‘s inclusion in the Nasdaq 100, & value created by our treasury operations with @SaraEisen. pic.twitter.com/3Mcu2ekGe2
— Michael Saylor (@saylor) December 16, 2024
Coinbase (NASDAQ: COIN) and Robinhood (NASDAQ: HOOD) also experienced gains, climbing as much as 4% and 9% since the market opened on Monday. MARA Holdings (NASDAQ: MARA), a Bitcoin mining company, saw its shares rise by as much as 13% over the past two trading sessions. Meanwhile, the Invesco QQQ Trust ETF (NASDAQ: QQQ), which will now include MicroStrategy, is positioned to benefit from the growing institutional interest in digital assets.
Ethereum (ETHUSD), Bitcoin’s closest competitor, regained the $4,000 mark, though its market capitalization of $483 billion remains far below Bitcoin’s $2.1 trillion. Analysts believe Bitcoin’s dominance in the crypto sector underscores its growing acceptance as a “digital gold” and a potential hedge against inflation.
Support and Skepticism
During a recent CNBC interview, Trump reaffirmed his commitment to the crypto industry. When asked whether he plans to create a Bitcoin reserve, Trump replied:
“We’re gonna do something great with crypto because we don’t want China, or anybody else … but others are embracing it, and we want to be ahead.”
Trump’s comments have further fueled investor optimism, with some speculating that the US could lead a global shift toward national Bitcoin reserves.
However, skeptics warn of potential risks. Bitcoin’s volatility and the lack of intrinsic utility compared to traditional reserves raise questions about its long-term viability. Critics also caution that large-scale government involvement could destabilize the market, particularly if Bitcoin prices decline.
Source: CNBC Television YouTube
A Pivotal Moment for Crypto
If enacted, the Strategic Bitcoin Reserve would represent a historic embrace of digital assets by the US government, with profound implications for the global financial landscape. Supporters believe it could enhance US economic resilience while positioning the nation as a leader in cryptocurrency adoption.
Brian Rudick, head of research at GSR, a crypto market maker, commented:
“If it seems like the US would go down this route … it could actually create this nation-state-level war for Bitcoin. At that point, the sky is the limit in terms of where the price could go.”
With Bitcoin’s ascent showing no signs of slowing, all eyes are on Washington as the crypto community awaits official confirmation of this groundbreaking policy shift.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
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