folks the Strategic Bitcoin Reserve is so close I can almost taste it what does that taste like in case you missed it president Trump has ordered the US government to look into creating a national stockpile of digital assets and this has got legislatures around the world a buzz with talk of treating Bitcoin as a strategic resource all of this has happened so fast that you may be left wondering wait why did governments need Bitcoin or perhaps will any of them really do it well good news in this video I’m going to break down what the Strategic Bitcoin Reserve is why it matters and which countries may be preparing to start one of their own my name is Guy stay tuned all right let’s begin with the basics what is a strategic reserve and why would a nation state want to keep BTC as a reserve asset well governments maintain strategic reserves of critical resources that can be released in emergencies or times of Supply disruption these resources are typically commodi and can be anything from gold oil and uranium to seeds and if you’re Canada maple syrup it’s not hard to understand why governments keep reserves of resources like these but what about crypto what is it about Bitcoin that makes it worth mentioning in the same breath as traditional Commodities of obvious strategic importance well I’m preaching to the choir here but let’s remind ourselves why BTC is valuable at the surface level we all know that BTC is now digital gold it’s a catchy analogy based on bitcoin’s ability to serve as a long-term store of value Bitcoin shares other similarities with gold to scarcity durability liquidity and so on but at the same time the logistics of acquiring transporting storing securing and liquidating gold give BTC some obvious practical advantages so taking all of this into account the notion that governments might want to complement their traditional Reserve assets with a bit of BTC is not as frivolous as Skeptics like to imagine however it’s only when you look beyond the gold analogy that a BTC Reserve starts to look like a matter of strategic importance in a report published last year Black Rock hailed BTC as a quote unique diversifier based on its starkly different and in many cases inverted risk and return drivers versus most traditional investment assets for example as the report explained BTC has no traditional counterparty risk depends on no centralized system and is not driven by any one country’s fortunes this means it has little downside exposure to macro risk factors like banking system crises sovereign debt crises currency debasement geopolitical disruption and other country specific political and economic risks that makes BTC sound like a great flight to safety asset like gold but this would be understating it because in practice these macro risk factors are only fuel for bitcoin’s growth Bitcoin is more like gold on steroids if gold is a shield against inflation BTC is the sword and speaking of macroeconomic risk Milton Friedman’s comment that quote all roads lead to inflation is as relevant as ever in the current environment in particular sovereign debt has spiraled so far out of control that printing money to devalue this debt seems like the only plausible outcome at the time of making this video the US national debt is around 36.4 trillion and up by more than $1 trillion in the last three months alone meanwhile the federal government spent more than $1 trillion paying interest on its debt in 2024 this represents the United States’s second biggest expenditure and is substantially greater than for example defense spending if this trend continues there is no viable path for the government to pay its debt other than printing more money more money printing means more inflation more inflation typically results in Central Bank interest rate hikes interest rate hikes means the national debt becomes more expensive to service and bigger debt repayments call for more money to be printed it’s a negative feedback loop and as long as it persists Bitcoin is likely to outperform in recent years Bitcoin has been described as quote the debasement trade because it’s a bet that pays off as money printing erodes the value of Fiat currencies the correlation between monetary easing and BTC outperformance was best demonstrated during the pandemic when stimulus spending caused a sharp increase in the global money supply or M2 in the 12 months from March 2020 to March 2021 M2 shot up from $74 trillion to $88 trillion and BTC ran IED from $5,000 to $61,000 amid an apparently Unstoppable charge towards more quantitative easing and inflation the Strategic value of owning Bitcoin makes a whole lot of sense as Fidelity put it in a recent report for nation states quote facing challenges such as debilitating inflation currency debasement and increasingly crushing fiscal deficits not making any Bitcoin allocation could become more of a risk than making one is still poorly understood large numbers of people politicians included don’t know why BTC has any value at all let alone strategic value of the kind that warrants creating a national reserve for no coiners the sight of a single Bitcoin trading at above $100,000 is probably inexplicable outside of the logic of a market bubble it’s tulip Madness for the 21st century nothing more nothing less however for those of us who have been orange pilled it’s no surprise to see BTC doing what it’s basically always done it’s not really that complicated Fiat is a perpetually sinking ship and Bitcoin is the escape raft now if we suppose that open accumulation of Bitcoin by nation states could soon become widespread then this gulfing understanding is a very big deal because it represents a historic window of opportunity like the early Decades of the internet the value of Bitcoin is not yet universally understood this implies enormous growth potential which is another way of saying we’re still early El Salvador and Bhutan serve as early models for governments considering establishing strategic positions in Bitcoin both countries have been able to glean substantial returns from their positions in a relatively short period of time however neither country is especially large or powerful and this has helped Skeptics to write off their Bitcoin adoption as eccentric and perhaps Reckless experimentation however if a large and Powerful nation state starts openly accumulating BTC it would likely trigger an International race by governments to establish a position of their own the present window of we’re still early would then close rather quickly as demand for BTC outstrips Supply and price is bid up by nation states all trying to clamber through said window before it’s too late at the time of making this video bitcoin’s market cap is $2 trillion this is an enormous number but less so if we’re talking about an asset that could be widely held in reserve by nation states for reference the market cap of gold is more than nine times larger at around $18.7 trillion the price of BTC could multiply several times over without its market cap coming close to Golds so in this context any govern announcing a strategic Bitcoin Reserve would invite much scrutiny about its average entry you may recall last summer when Germany was ridiculed for the sale of 50,000 state-owned BTC at $53,000 we laughed about it but this was a terribly negligent move if even the slightest care had been taken the state could have raised billions of dollars more in revenue from this sale to spend on you know hospitals schools and so on Germany was a case study in how not to sell your BTC and no country will want to do the same thing in Reverse I.E establish a strategic Reserve by blasting the top of a bull run this would result in a strategic mess of massive unrealized losses that could persist until the following bull market the Fidelity report I mentioned earlier also described the Dynamics that we’re likely to see if a US strategic Bitcoin Reserve is established quote we believe the political and Financial Game Theory at play will force other nations to follow suit however if this strategy were to be adopted it is likely that nation states would begin accumulating in secret this is because no nation has an incentive to announce these plans as doing so could influence more buyers and drive up the price while it remains to be seen if this strategy will be implemented in 2025 those who would potentially adopt it will be incentivized to do so covertly now this may makes a lot of sense so much sense actually that it’s worth seriously considering whether any countries might be doing this already there are logistical legal and political considerations involved that suggest covert accumulation of BTC may be easier in countries where the rule of law is weaker and clandestine organs of the state are powerful whether overt or covert any active accumulation will depend on the political circumstances and orientation of the government involved if we’re talking about North Korea for example the state already has sophisticated means of permanently borrowing crypto from other countries and might not need to worry about public disclosure they’re a bit of an exception though and probably have a decent amount of BTC anyway so let’s take a look at some of the other countries where a BTC Reserve is under consideration by at least some elements of the government and ruling classes front and center is of course the United States 2024 was the year when the notion of a strategic reserve of Bitcoin escaped the imagination of the crypto community and found its way into the US capital we have three key figures to thank for this RFK Jr who campaigned for the US government to accumulate 4 million BTC Donald Trump who deafly positioned himself as a pro BTC stockpile candidate without ever actually suggesting the federal government buy more BTC and espe especially Wyoming Senator Cynthia lumus who introduced the Bitcoin Act of 2024 to the Senate last July ls’ Bill proposed that the US buy up to 1 million BTC over the next few years as a matter of strategic priority the senator recently became the first ever chair of the Senate’s new subcommittee on digital assets where she is very likely to pursue the BTC Reserve idea meanwhile shortly after president Trump’s inauguration he ordered the creation of a government crypto working group tasked with among other things exploring the creation of a national stockpile of digital assets this was tantalizing because it signaled Trump’s apparent intention to follow through on his crypto related pledges without actually saying anything new if you haven’t been following the substance of Trump’s comments about a BTC Reserve is a pledge to not sell the government’s existing Holdings which consists of BTC confiscated by law enforcement he has never explicitly called for the government to buy more BTC and his new executive order has not changed this in fact it actually alluded to the possibility that the US government will just be ordered to keep what it already has if there’s anything notable about this order it’s the broadening of the language to reference digital assets and not just BTC the order says that the working group will quote evaluate the potential creation and M maintenance of a national digital asset stockpile potentially derived from cryptocurrencies lawfully seized by the federal government through its law enforcement efforts this has fueled speculation about the inclusion of altcoins in a future Reserve Ripple CEO Brad garlinghouse is known to have lobbied Trump personally to include altcoins in the potential Reserve although some bitcoiners say this is a deliberate attempt to sabotage the prospects of any federal crypto Reserve seeing the light of day Ripple has even been accused of planting a false story in the New York Post that claimed president Trump was receptive to the idea of a reserve of altcoins of us origin there’s much Intrigue and speculation around this and for more check out our video about the outlook for ripple and xrp under the second Trump Administration which is linked to down below for the time being there is no concrete indication not yet at any rate that the federal government will start actively buying BTC although it is a very real possibility okay our next stop is China now like other countries the suggestion that China might start accumulating BTC is framed as a reaction to the US doing so first we know that Beijing is no friend to crypto and there’s no indication from the government there that it will establish a BTC Reserve however China’s special administrative region Hong Kong has spent the last few years rebranding itself as a digital assets Hub and Beijing has not so much tolerated as actively encouraged this transformation this has some wondering if Beijing might not be using Hong Kong as a laboratory for crypto policy liberalization as for a crypto Reserve chairman Johnny un of the Hong Kong legislative council’s web 3 and virtual assets development subcommittee told a state-owned pro Beijing newspaper late last year that he had been lobbying the Hong Kong government to Pilot the adoption of BTC as a strategic iic Reserve asset notably he framed this as a matter of National Security and since National refers to the People’s Republic of China this implies that un is imploring Beijing to consider establishing a strategic BTC Reserve now there is no indication from Beijing that it has any such intention however as the United States’s primary rival the stakes might be high enough for China to be accumulating BTC in secret because as I alluded to earlier if Beijing buying BTC were to hit the headlines it would send shock waves around the world and likely send the price of BTC absolutely skyrocketing this would not be conducive to building a position on anything like an optimal cost basis this is just speculation though okay next we’re headed to Russia where the government recently made history by making the use of BTC to settle International Trade deals an official policy this is the most significant case of Bitcoin adoption at the nation state level after El Salvador and Bhutan Russia is many times larger and more powerful than either of these countries so its trading in BTC will be remembered as a landmark development in crypto history amidst all the Bitcoin related excitement of late one minority party lawmaker asked Russia’s finance minister to consider the creation of a strategic BTC reserve the minister Anton s ianov said the government had no immediate plans for this but notably didn’t rule out the idea in principle the Crux of sano’s argument was basically that BTC has already pumped a whole lot and buying right now would incur significant downside risk he concluded quote we’ll see where things stand in 5 to 10 years now this sounds like a rather throwaway comment because the price of BTC will likely be much higher in 5 to 10 years still we take his point he’s not opposed to a BTC Reserve in principle but wants to be prudent about it rather than foming into a local top so that’s a not now but maybe later from Russia then we have Brazil where a lawmaker introduced a bill resembling Senator lumus Bitcoin act to the National Congress in November 2024 Congressman Eros bondini proposal to create a strategic Bitcoin Reserve called rbit would have the Central Bank accumulate BTC until makes up 5% of Brazil’s national reserves this would be around $8.6 billion worth of bitcoin or 186,000 BTC if we assume a cost basis of $100,000 we have yet to hear any update in English language media on how Beyond’s bill is progressing in the Brazilian Congress if at all but we will keep you posted moving on there’s a Libertarian candidate in Poland’s 2025 presidential election who has in enthusiastically backed the idea of a strategic BTC Reserve as of late January 2025 po data had slir Menon trailing in third place though with just 13.1% of respondents supporting his campaign however the elections are scheduled to take place on May the 18th so menson has ample time to catch up and persuade the nation to buy Bitcoin in the interim meanwhile somewhere to Poland’s left we find Germany where former Finance Minister and FD P party leader Christian Lindner urged the German Parliament in January to discuss quote whether to issue Bitcoin as a strategic Reserve asset previously Linda had called for both Germany’s Central Bank and the European Central Bank to add BTC to their reserves elsewhere in Europe the Czech Central Bank Governor alesh michell expressed his interest in acquiring quote a few BTC as part of the bank’s diversification strategy although he said that this would not be a significant investment for the bank any such decision would need to be approved by all seven members of the Czech National Banks board however board advisor Janis alapio confirmed to coin Telegraph quote CNB is not now considering buying crypto assets for its reserves however Governor michell did not rule out further future debate on this topic so a bit like Russia then not now maybe later and we need to give a special mention to Japan here because although the prime minister’s office there was dismissive of the idea of a Bitcoin reserve the politician who asked the government to consider the idea was named Satoshi you really can’t make this stuff up so the lead of the United States has placed Us tantalizingly close to BTC being designated as a strategic resource and actively accumulated by governments Trump’s task force is going to investigate this idea and of course we have Senator lumus headed a new Senate subcommittee where she is likely to pursue the Strategic Reserve agenda and yet for the time being the Strategic Reserve is still just a proposal governments are not accumulating BTC as a matter of strategic importance at least as far as we know on the other hand it’s true that it would be much more prudent and advantageous for governments to accumulate BTC covertly before a major power starts bidding up the price in broad daylight the incentive to accumulate quietly and before anyone else is great enough to make it plausible that governments are already doing so but on the other hand depending on the government this may or may not be politically practicable so how will we look back on this moment q1 2025 will it be the precipice of a new era of government stacking SATs and driving the price of BTC beyond our wildest imaginations or will we groan in hindsight at how top signal all of this screams how will the BTC Reserve be perceived in the depths of the next bare Market will government spot their chance at a generational entry or will confidence and interest in crypto once again be so low that no government wants to touch BTC because you know it died for the hundredth time or whatever now we’d love to hear your takes in the comments down below and if you got something out of this video be sure to drop us a like to stay up to speed on all the latest Bitcoin Reserve developments make sure you’re subscribed and have your bell notifications turned on and that way you’ll never miss another upload from us and if you’re looking for what to watch next then why not check out our video on what cryptos the president of the United States himself is into as always thank you for watching and I will see you next time [Music]
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