Establishing a nationwide Bitcoin (BTC) strategic reserve might create unfavorable market impacts for BTC and the US greenback, in keeping with Haider Rafique, international managing accomplice for presidency and investor relations at crypto alternate OKX.
Rafique instructed Cointelegraph that any authorities holding important parts of the BTC provide may manipulate costs by dumping its holdings onto the market, thereby disrupting the core proposition of BTC as impartial, decentralized cash.
He requested: “What occurs in a number of years if a brand new administration decides this was a foul concept?” Rafique added:
“Regardless of latest bipartisan help for crypto, it’s important to do not forget that administrative insurance policies can change rapidly. As circumstances change over time, the focus of enormous quantities of BTC on a rustic’s stability sheet may signify a liquidation danger.”
The German authorities was an instance of this in 2024 when it unloaded 50,000 BTC, which stored costs suppressed under the $60,000 stage, Rafique mentioned.
The Bitcoin strategic reserve continues to be top-of-mind for a lot of Bitcoin advocates, who say that establishing such a nation-state-level BTC treasury is the subsequent step to creating Bitcoin the worldwide reserve forex and the usual financial unit of account.
Associated: US lawmakers faucet Saylor, Lee to advance Bitcoin reserve invoice
Dangers to the US greenback and different monetary markets
Establishing a Bitcoin strategic reserve may create a contagion that wouldn’t simply be restricted to crypto markets and would have widespread macroeconomic results, Rafique instructed Cointelegraph.
“Essentially the most important macroeconomic implication could be a lack of confidence within the greenback,” he mentioned.
Constructing a Bitcoin reserve alerts that the US greenback, which underpins the worldwide financial system, is weak and can’t maintain its worth on financial energy alone, he added.
This might ship shockwaves via your complete monetary system as traders flee the US greenback for safe-haven belongings corresponding to gold or the Swiss franc, Rafique mentioned.
Buyers would additionally dump risk-on belongings, making a cascade of liquidations throughout monetary markets that will seemingly culminate in a major crash, as markets reply to the seismic shift in international finance, he concluded.
Journal: US dangers being ‘entrance run’ on Bitcoin reserve by different nations: Samson Mow
