Why Donald Trump Needs To Create A Strategic US Bitcoin Reserve

Donald Trump’s recent election victory has reignited discussions around his campaign promise to establish a strategic US Bitcoin reserve. Although the proposal remains unimplemented, it has sparked curiosity about whether this will actually happen, what such a BTC reserve could entail, and how it might function if brought to fruition.

 The conversation, inspired by Donald Trump’s campaign promises to base Bitcoin as a centerpiece in US economic policy, outlined the current relevance of Bitcoin on the world stage and how it might compare to traditional assets such as gold. Anthony Pompliano, founder & CEO of Professional Capital Management and ardent supporter of Bitcoin, presented his thoughts about the United States and its potential as an adopter of Bitcoin to be held as a strategic BTC reserve.

Will Donald Trump Create The US Bitcoin Reserve? Pompliano Weighs In

Anthony Pompliano, founder & CEO of Professional Capital Management emphasized the strategic necessity of creating US Bitcoin Reserve, given how different countries, such as El Salvador and Bhutan, have already welcomed Bitcoin into their national reserves.

Pompliano signaled the need for urgency within the US to take action, stating that although Bhutan is currently not a major global economy, the country’s proactive approach toward Bitcoin can easily make it a significant player in the future. Bhutan’s BTC holdings just recently increased to over $1 billion.

The market expert also said the same goes for El Salvador, as it could become a global economy thanks to its Bitcoin exposure. Speaking further on the need to create the Bitcoin reserve, Pompliano said, “This asset (Bitcoin) is so asymmetric. If it continues to compound, it will translate into billions of dollars on their balance sheets while the US struggles with a growing national debt.”

During one of his pre-election speeches at the Bitcoin conference in July, Donald Trump promised that under his government, the US would retain all the Bitcoin in possession in order to create a US Bitcoin Reserve for the “good of all Americans”.

Even though there are still questions regarding the final outcome, the idea evolved into what has since become known among cryptocurrency enthusiasts as a strategic US Bitcoin reserve, with some, such as Senator Cynthia Lummis, proposing a gold sale to acquire up to 1M Bitcoins. At today’s market prices, such a BTC reserve would be worth more than $90 billion, placing the US as a hegemon in the Bitcoin economy.

Bitcoin to Eclipse Gold as the Ultimate Store of Value

A Strategic US Bitcoin Reserve would serve as a government-held asset designed to bolster economic resilience during periods of financial instability. By leveraging Bitcoin’s decentralized nature and scarcity, such a BTC reserve could potentially act as a hedge against inflation, currency devaluation, and global economic disruptions. Donald Trump’s approach aligns with the growing recognition of Bitcoin as a “digital gold” and its increasing adoption by nations seeking financial sovereignty.

Pompliano went on to parallel Bitcoin to gold, adding that while Bitcoin currently maintains a market capitalization of around $1.7 trillion, gold stands at $17 trillion. He said that as a digital asset, Bitcoin would overtake gold’s market capitalization because of its advantage as a digital store of value.

“There’s not an example where the digital product doesn’t outsize its analog counterpart,” Pompliano said. He made the case that Bitcoin’s first and foremost use case-store of value solves a global problem: preserving wealth from inflation and currency devaluation. Whereas central banks constantly devalue fiat currencies, he said, Bitcoin is a deflationary, capped alternative that gives individuals and countries a choice.

Pompliano further explained how that might trickle down from Donald Trump’s strategy of establishing a US Bitcoin reserve: If the United States puts cash into Bitcoin, that means every state and local government should also allocate their reserves to Bitcoin. “You’re sitting with cash that’s guaranteed to lose value. If you want to fulfill your fiduciary duty, sitting in 100% cash is the wrong answer,” he said. 

He cited MicroStrategy’s success under Michael Saylor’s leadership, who recently acquired an additional 27,200 BTC, stating that large institutional onboarding into Bitcoin provided protection from inflation. Pompliano further called for all levels of government to “get off zero” and consider a minimum allocation to Bitcoin of at least 1%.

Novogratz: BTC Reserve Unlikely, But Could Propel Price to $500K

Michael Novogratz, the billionaire CEO of Galaxy Digital, expressed skepticism about the strategic adoption of a US Bitcoin reserve idea, despite President-elect Donald Trump’s proposal. He specified that there were low chances for the BTC reserve under Trump.

However, he acknowledged the potential strategic value of such a move. “It would be very smart for the United States to take the Bitcoin they have and maybe add some to it,” he suggested. “That would signal to the world that we are a technology-first country, a crypto, digital asset-first country. I don’t necessarily think that the dollar needs anything to back it up, but it would make a statement.”

Novogratz predicted that if there will be a US Bitcoin reserve establishement, it could trigger a massive rally in the digital asset’s price. “If we get the BTC reserve, as a guy who owns a lot of Bitcoin, I won’t cry,” he quipped. “I think Bitcoin heads to $500,000. It’s a different paradigm because it forces every other country in.”

Bitcoin, currently trading near a record $90,291, could see unprecedented growth if this proposal were enacted, pushing the cryptocurrency further into the global financial spotlight.