Will Bitcoin Become a US Reserve Asset Under a Potential Trump Presidency and What’s Next for BTC Price
A New Era for Cryptocurrency?
In a shocking revelation, President-elect Donald Trump is expected to issue an executive order on his first day in office to designate Bitcoin as a United States reserve asset. This move, according to Jack Mallers, founder and CEO of Strike, could have far-reaching implications for the cryptocurrency market.
A Potential Game-Changer: The Dollar Stabilization Act
Mallers points out that Trump can rely on provisions within the so-called ‘Dollar Stabilization Act,’ which grants him considerable authority to protect the US dollar. This act provides a potential framework for Trump to take action and make Bitcoin a reserve asset.
A Significant Position, Not 1 Million Coins
While some might expect a massive buy-in of 1 million coins, Mallers notes that the initial position would be significant but not on this scale. Instead, it would likely be a substantial purchase to establish a presence in the market.
The Bitcoin Act of 2024: A Proposal for a National Reserve
In July 2024, pro-crypto Senator Cynthia Lummis introduced TheBitcoin Act of 2024. This proposal suggests that the Treasury and Federal Reserve should purchase 200,000 BTC annually over five years, accumulating 1 million Bitcoin. This reserve would be held for at least 20 years, thereby taking 5% of Bitcoin’s total supply from circulation.
Speculations and Price Targets
These speculations have resulted in some lofty new BTC price targets for 2025 and beyond. According to Perianne Boring, founder of The Digital Chamber, Bitcoin’s capped supply could lead to significant price appreciation, especially if Trump successfully implements many of his proposed crypto policies.
Bitcoin Price May Hit $800,000 by 2025
Borings points out that if Donald Trump is successful in putting forth a lot of the proposals he’s proposed to the [crypto] community, the sky is the limit because Bitcoin has a fixed supply. She references the stock-to-flow model, which forecasts Bitcoin’s price to exceed $800,000 by the end of 2025.
The Stock-to-Flow Model: A Forecast for Unprecedented Growth
This model predicts that Bitcoin will average around a $500,000 valuation across 2025. However, it also suggests that the price may go as high as $1 million. This forecast is based on the assumption that demand for BTC will continue to increase.
A National Reserve: Reinforcing Stronger Demand
The US Treasury accumulating 200,000 BTC each year reinforces the idea of stronger demand since it’ll likely force other countries to consider strategic Bitcoin reserves of their own. This creates a snowball effect, where more and more institutions are drawn to investing in Bitcoin.
BlackRock’s Recommendation for Investors: A 1-2% Allocation
BlackRock, which manages over $10 trillion worth of assets, is already recommending investors allocate 1-2% of their portfolios to Bitcoin. According to four senior executives, including Samara Cohen and Paul Henderson:
"We see a case for investors with suitable governance and risk tolerance to include Bitcoin in a multi-asset portfolio."
Theoretical Implications: A $900 Trillion Reserve
To put this into perspective, the total global reserve assets are valued at about $900 trillion. A 2% allocation to Bitcoin from this pool would theoretically drive the cryptocurrency’s price to around $900,000 per unit.
Conclusion and Takeaways
While this article does not contain investment advice or recommendations, it highlights the potential implications of Trump’s executive order on Bitcoin. The stock-to-flow model suggests that Bitcoin could reach unprecedented prices if demand continues to increase.
References:
- "TheBitcoin Act of 2024" by Senator Cynthia Lummis
- Stock-to-Flow Model by PlanB
- BlackRock’s Report: "A Case for Investors to Include Bitcoin in a Multi-Asset Portfolio"
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