One million bitcoins could become part of the U.S. national reserve

Donald Trump has won the presidential election, after which Senator Cynthia Lummis expressed her support for the idea of establishing a strategic reserve in bitcoins. The proposed legislation known as the "cryptocurrency queen's" bill from Capitol Hill, the BITCOIN Act of 2024 (Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act), aims to acquire 1 million bitcoins over five years and create secure bitcoin storage under the management of the Treasury.

WE ARE GOING TO BUILD A STRATEGIC BITCOIN RESERVE 🇺🇸 🇺🇸 🇺🇸

— Senator Cynthia Lummis (@SenLummis) November 6, 2024

If the bill is passed, it would mean significant investments in cryptocurrency by the U.S. government, boosting its popularity among institutional investors. In light of these plans and considering Trump's previous statements on cryptocurrencies, the price of bitcoin has reached a record high of $76,000. This may not be the limit.

The planned reserve under the BITCOIN Act will account for approximately 5% of the total bitcoin supply, giving it a status similar to gold. Trump has frequently criticized the current Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, for his stringent policies on digital assets. The Trump administration is likely to appoint regulators who are sympathetic to these issues. This, combined with the support of major crypto companies such as Coinbase, A16Z, and Ripple, could significantly ease the passage of cryptocurrency-friendly laws in Congress.

It is already known that the 47th president of the United States intends to involve Elon Musk in efforts to cut government spending and reduce the national debt by $2 trillion. At the same time, a loosening of monetary policy is planned, which could enhance market liquidity and increase bitcoin's attractiveness as a hedge against inflation.

The next four years could see a period of substantial institutional support, increased interest from the government, and widespread public recognition of cryptocurrencies in general and bitcoin in particular.

Source: CoinShares Research Blog