Bitcoin hits all-time highs as US eyes strategic reserve
BITCOIN has surged to new all-time highs, breaking the $84,000 mark on Monday, spurred by fresh optimism over a bold proposal to establish a national Bitcoin reserve in the United States.
The initiative, spearheaded by Senator Cynthia Lummis and backed by the incoming Trump pro-Bitcoin administration, has ignited market enthusiasm, pushing the cryptocurrency’s value even higher.
We are now forecasting Bitcoin could reach $100,000 by late January when Donald Trump is set to begin his second term as US president.
The proposal, formally known as the BITCOIN Act (Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act), calls for the Treasury to acquire one million Bitcoin over the next five years.
The plan is aimed at strengthening the dollar’s standing as global inflationary pressures intensify, while positioning the United States as a leader in financial innovation.
Lummis believes this strategic reserve could help reduce the national debt by 50% by 2045, citing Bitcoin’s capped supply and deflationary nature as key to its long-term value.
With the digital asset’s latest rally, the ambitious proposal has gained significant momentum.
As of the 2024 election, Republicans have regained control of the Senate and are likely to retain their hold over the House of Representatives, giving them a majority in both chambers as Donald Trump prepares to assume the presidency in January.
This shift in power is expected to facilitate the passage of GOP-backed legislation, including initiatives like the proposed Bitcoin strategic reserve and other Republican-aligned economic policies.
Trump’s campaign embraced the cryptocurrency as part of a vision to make the US a “Bitcoin superpower,” with a national reserve at its core. The alignment between the legislative and executive branches on this initiative has fuelled hopes that the act could become law within months of his inauguration.
Industry leaders have praised the proposal, highlighting its potential to stabilize and strengthen Bitcoin’s position in the financial ecosystem.
MicroStrategy co-founder Michael Saylor and Riot Platforms VP of Research Pierre Rochard have voiced support for Lummis’s initiative, with Saylor emphasising that establishing a reserve would serve as a critical inflation hedge for the nation.
The backing from notable crypto figureheads is likely to encourage institutional investment, as investors view the US government’s involvement as a significant endorsement of Bitcoin’s legitimacy.
Samson Mow, a prominent Bitcoin advocate, also weighed in, warning of the “massive geopolitical ramifications” if the US were to fall behind in Bitcoin accumulation.
He points out that as Bitcoin’s price surges past $100,000 and beyond, the barriers to acquiring a substantial reserve increase significantly. He stressed the importance of securing Bitcoin at prices below $100,000, a level he believes will soon be considered a historic low.
The potential for government demand is also expected to drive up Bitcoin’s price rapidly. As a limited asset, Bitcoin’s value has consistently trended upward during periods of heightened demand.
The Treasury’s acquisition of one million Bitcoin over five years would impact market supply, creating a demand-driven tailwind for prices.
We predict that if the BITCOIN Act is passed, it could trigger a wave of FOMO (fear of missing out) from institutional investors and even other nations looking to secure their share of Bitcoin before prices move too high.
Beyond market forces, the geopolitical implications of a US-backed Bitcoin reserve are vast. By designating Bitcoin as a strategic asset, the US would set a precedent for other countries, potentially prompting allies and even competitors to follow suit.
This would mark the beginning of a global race to adopt Bitcoin as a reserve asset, reshaping financial markets and diminishing the dominance of fiat currencies.
As the world’s largest economy, America embracing the crypto could also legitimise its use and adoption, paving the way for broader acceptance in traditional finance.
The proposal is also seen as a safeguard against rising inflation. President-elect Trump’s administration is expected to implement expansive spending policies, which, coupled with potential tariffs, could accelerate inflation.
Bitcoin’s deflationary design, with its fixed supply cap of 21 million coins, makes it an attractive hedge in this inflationary environment. As more investors recognise Bitcoin’s utility as a store of value, demand for the asset is expected to grow, creating further upward pressure on its price.
Lummis’s strategic vision for a Bitcoin reserve, coupled with Trump’s enthusiastic support, has resonated with investors looking to hedge against the erosion of purchasing power.
The proposal to amass a substantial reserve of Bitcoin reflects an understanding that the future of money is digital, with Bitcoin positioned at its forefront.
For investors, this marks an unprecedented shift that could bring significant returns in the near term.
Nigel Green, deVere Group CEO and founder
