Hello everyone. A very good evening to you all. A couple of days ago I saw news regarding The USA buying a strategic amount of bitcoins to use as a reserve. Now that particular headline is quite an eyebrow raiser. If you think about it even 3, nobody would ever think of such measures. But apparently it's a thing now. And it is picking up steam. So I believe we all should try to understand what is actually the plan of this bill and how it can benefit the crypto market if it can benefit the crypto market.
First of all, we should address How serious the country is about this prospect. Turns out they're pretty serious. And they are obviously going to use their previous holdings. What do I mean by previous holdings? These are the bitcoins. The US law enforcement, such as The FBI confiscated from White collar criminals. A common example will be Sam Bankman-Fried. When he was convicted, his crypto portfolio was confiscated as well. An even better rational example is the founder of Silk road, The dark web narcotics version of eBay. The US government has held on to these confiscations, and are now willing to use them as state reserves. The crypto bill states that the Federal reserve will buy 1 million bitcoins over the span of the next 5 years. And they expect these to be a substitute for gold. But that doesn't mean they will sell off all their gold. They just want to back the currency against Bitcoin. How good of an idea is that? Because Bitcoin, unlike gold, was very volatile all the time. So backing the world reserve currency against something as volatile as Bitcoin is quite risky. At the same time, in the long term, over the past 15 years, Bitcoin has only gone up. So short-term it may be very volatile, but in the long term it has proved to be a good store of value. Probably this is the thing they are hoping for. As they plan to reduce their debt by 50% in the next few years. And probably they are willing to pay those debts in bitcoins.
All this is fascinating, because analysts and experts suggest that if the bill goes to pass, The price of Bitcoin will increase a lot, supposedly to half a million dollars. That might be good news for the average trader. But if you know what a Bitcoin is, you know that it is against the core tenets of Bitcoin. As you all know, Bitcoin was founded in the wake of the 2008 financial crisis, as an alternative to the banking sector and a decentralized finance so that the world may never suffer something like that again. And now we see governments not only the USA, but also Russia, China and other countries leaning in towards making Bitcoin their reserve, which is absolutely the opposite of what Bitcoin stands for.
I really don't know what the future holds for us. If the bill passes, I believe it has a very good chance. Because big crypto was one of the biggest spenders in the US elections this year so obviously they are lobbying for something. Bitcoin and cryptocurrency in general might be in for a new era, was it that's good or bad, I don't know. I hope it's good, because who would want to see such an idea die something so revolutionary something so secure.
