The Bitcoin Reserve Act could break the 4-year cycle

The crypto ecosystem could enter an unprecedented phase of transformation. For years, markets have followed well-established cycles, dictated by the internal mechanisms of bitcoin, notably halving, which punctuates periods of rise and fall. Today, a major political initiative is emerging, likely to shake up these historical foundations. U.S. Senator Cynthia Lummis has proposed the Bitcoin Reserve Act, a bill that seeks to recognize bitcoin as a strategic reserve asset for the United States. This initiative, which provides for the gradual integration of one million bitcoins into the American federal reserves, takes place in a context of growing economic and geopolitical rivalries. While powers like Russia and Germany are also considering adopting similar strategies, this project is challenging. Furthermore, the implications of such an approach go beyond American borders and redefine the role of Bitcoin on the international scene, which gives it an unprecedented status in the history of cryptos.

The bold Bitcoin Reserve Act proposal

The Bitcoin Reserve Act, proposed by Senator Cynthia Lummis, aims to provide the United States with an innovative legal framework to integrate bitcoin into its strategic reserves. This bill provides for the purchase of 200,000 bitcoins per year over a period of five years, which will allow the American government to accumulate a total of one million bitcoins. Such an initiative reflects an ambitious vision, which aims to make bitcoin a pillar of American public finances in order to consolidate its status as a globally recognized asset. Iliya Kalchev, an analyst at Nexo, called the move “a historic moment for bitcoin.” He believes that it could formalize its legitimacy as a “global financial instrument”.

Support for this proposal finds particular resonance in the camp of President-elect Donald Trump, known for his positions favorable to the crypto industry. Thus, during an interview with CNBC, Trump compared the establishment of a strategic stockpile of bitcoin to that of American oil reserves, and underlines its potential as a national reserve asset. This position was corroborated by Denis Porter, co-founder of the Satoshi Act Fund. In a post dated December 15, 2024 on the social network

However, despite this apparent enthusiasm, notable obstacles could slow down the realization of the project. If a presidential decree would lay the first foundations, the sustainability of such an initiative would depend on a vote in Congress. This legislative passage is essential to protect the program against possible political reversals, particularly during changes in majority. Such political uncertainty illustrates the challenges inherent in implementing such an ambitious strategy, in a context where bitcoin remains a subject of debate within American institutions.

Global competition and upheaval in market dynamics

The impact of the Bitcoin Reserve Act could extend far beyond U.S. borders, triggering unprecedented global momentum. According to several experts, this initiative would push other nations to build up their own bitcoin reserves so as not to lose their economic competitiveness. Crypto lawyer George S. Georgiades described this project as a possible catalyst for widespread adoption: “Implementation of the Bitcoin Reserve Act would result in a major shift for global adoption. This could force nations to follow suit or risk being left behind.” Such international competition could accelerate the transformation of bitcoin into a global monetary standard, and would position this crypto as an essential strategic asset.

This change would also have profound consequences on the behavior of institutional investors. Thus, unlike traditional bitcoin cycles, historically dominated by halving and characterized by periods of strong growth followed by brutal corrections, sustained demand by governments and financial institutions could significantly reduce volatility. This development, already perceptible, would call into question the famous four-year cycles. “We are already seeing structural changes, and the four-year cycles have been called into question several times,” emphasizes Iliya Kalchev.

In the longer term, this upheaval could introduce increased stability to the markets, which would attract more institutional investors. The latter, with their disciplined strategies and greater financial capacities, would be able to lastingly influence current dynamics. Indeed, the reinforced presence of institutional players could transform bitcoin into a market less reactive to the speculative behavior of individuals, which would reduce the amplitude of price fluctuations. In this context, the adoption of the Bitcoin Reserve Act would pave the way for a new era, where bitcoin would no longer be just a reserve asset, but a true pillar of global financial systems.

The adoption of the Bitcoin Reserve Act could constitute a historic milestone in the way governments think about cryptos, which would redefine the role of bitcoin on the international stage. This initiative could transform crypto into an essential strategic asset, with a view to lastingly influencing the dynamics of financial markets. However, this bold vision is not without risks. Increased volatility could set in in the short term, while a new balance is established.

Luc Jose A.

A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal issues of this ongoing revolution.