Donald Trump will do something “crazy” or “something great” with bitcoin's strategic reserve policy
The president-elect of the United States Donald Trump has promised to make America the “cryptocurrency capital of the planet.” While during his first term as president of the United States, Trump had stated that cryptocurrencies are “not money” and that their value was “highly volatile and based on nothing”, today he has changed his mind. During his reelection campaign, Trump launched his own cryptocurrency venture (World Liberty Financial) and received millions of dollars in donations (in the form of bitcoin, ether, and XRP) from supporters, including some pro-crypto billionaires. Since vowing to make America the “cryptocurrency capital of the planet,” Trump's promises to enact pro-cryptocurrency policies have helped push the value of bitcoin to new records. Trump has also appointed cryptocurrency advocates to key roles in his administration. However, one of Trump's most controversial policies is the creation of a “strategic bitcoin reserve,” which would essentially require the United States to accumulate bitcoin and hold it for a significant period of time. At this stage, there are not many details on what a strategic reserve would look like. Some analysts predict that the value of the highly volatile cryptocurrency will continue to rise, particularly if the U.S. government is using taxpayer money to purchase large amounts.
Strategic reserves
When we talk about “strategic reserves”, we most likely think of oil. One of the best-known examples is the US Strategic Petroleum Reserve (SPR), an emergency reserve of crude oil created by Gerald Ford's government in 1975, in response to the Arab oil embargo, which caused serious damage to the US economy (with prices of petrol, inflation and unemployment rising sharply). More recently, in 2022, these crude reserves proved useful, when the Biden administration released a record 180 million barrels from the SPR to blunt the impact of an oil price spike caused by Russia's invasion of 'Ukraine. China also has strategic reserves, containing millions of tons of copper, aluminum, zinc and other metals that are crucial to its industries. Curiously, Canada is the only country to have a strategic reserve of maple syrup. The idea is that these raw material stocks can be released during emergencies, to minimize the impact of supply shortages and inflationary shocks. It is quite clear that bitcoin, which has only existed for 15 years, has nothing in common with oil, industrial metals and maple syrup.
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