Trump Suggested a Monumental $280 Trillion Bitcoin Reservation as a Measure to Secure the U.S. Dollar's Stability
The U.S. president-elect, Donald Trump, has played a role in pushing bitcoin prices to unprecedented heights this year, with proposals to establish a U.S. bitcoin strategic reserve in mind.
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Bitcoin's price has seen a significant surge since its summer lows, breaching the $100,000 per bitcoin mark as warnings about the Federal Reserve's "worst nightmare" coming true become more frequent.
Meanwhile, rumors suggest that Russia could develop a bitcoin reserve before the U.S., prompting Trump to consider a plan to stimulate the economy and create wealth by integrating bitcoin, as proposed by MicroStrategy founder Michael Saylor.
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In a document titled a "digital asset framework," Saylor proposed that a U.S. bitcoin reserve could bolster the U.S. dollar, reduce the national debt, and put the U.S. at the helm of the 21st-century digital economy. The plan estimates that a U.S. bitcoin reserve could generate trillions of dollars and bolster the U.S. dollar's status as the cornerstone of the digital financial system.
Last week, Trump confirmed his intention to establish a U.S. bitcoin reserve, expressing his wish to replicate the U.S.'s oil reserve.
During his 2016 campaign, Trump pledged to create a "strategic national bitcoin reserve" and predicted that Bitcoin could exceed gold's $16 trillion market capitalization during a speech at the Bitcoin 2024 conference.
U.S. Senator Cynthia Lummis has drafted a bill to Congress, suggesting that the U.S. Treasury invest in 200,000 bitcoins annually until the reserve reaches one million bitcoins in total.
According to Saylor's pitch, the global digital capital markets could expand from $2 trillion to $280 trillion, with U.S. investors capturing the bulk of this wealth. Saylor also expects the digital assets sector (beyond bitcoin) to grow exponentially, with the U.S. taking a leading role.
The booming bitcoin and crypto market is set to create substantial demand for U.S. Treasury bonds, as predicted by Saylor, in reference to Tether's massive U.S. Treasury holdings, which have driven profits of $10 billion in 2024.
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MicroStrategy, which began as a software company, has transformed into a "bitcoin treasury" business, financing its bitcoin acquisitions through the sale of convertible notes and at-the-market stock offerings.
MicroStrategy has seen success following the bitcoin price surge, with its stock value surpassing bitcoin itself as traders utilize the company's shares as a proxy for bitcoin. In January, MicroStrategy was inducted into the Nasdaq 100 index, which is expected to drive further growth in its stock price.
Nevertheless, Markus Thielen, the CEO of 10x Research, emphasized that Michael Saylor's journey with Bitcoin indicated valuable lessons, even if not immediately apparent.
"In June 2021, Donald Trump, then U.S. president, expressed his skepticism towards bitcoin, describing it as a 'scam.' However, by the summer of 2024, Trump had become a strong advocate for bitcoin."
Trump's stance on Bitcoin shifted significantly, as he expressed interest in establishing a U.S. bitcoin strategic reserve, mimicking the country's oil reserve. This plan was influenced by MicroStrategy founder Michael Saylor's proposal for a U.S. bitcoin reserve.
Under Saylor's proposal, a U.S. bitcoin reserve could bolster the U.S. dollar, reduce the national debt, and position the U.S. as a leader in the 21st-century digital economy. The plan estimates that this reserve could generate trillions of dollars.
During his 2016 campaign, Trump had also proposed creating a "strategic national bitcoin reserve." He predicted that Bitcoin could surpass gold's market capitalization of $16 trillion, a prediction that seems more plausible considering Bitcoin's current price surge.
