Establishing a nationwide Bitcoin (BTC) strategic reserve could create detrimental market impacts for BTC and the US greenback, in response to Haider Rafique, world managing companion for authorities and investor relations at crypto change OKX.
Rafique instructed Cointelegraph that any authorities holding significant portions of the BTC supply might 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 few years if a new administration decides this was a dangerous concept?” Rafique added:
“Regardless of current bipartisan help for crypto, it’s important to keep in mind that administrative insurance policies can change shortly. As circumstances change over time, the focus of huge quantities of BTC on a nation’s steadiness sheet might characterize a liquidation danger.”
The German authorities was an instance of this in 2024 when it unloaded 50,000 BTC, which stored costs suppressed beneath the $60,000 stage, Rafique mentioned.
The Bitcoin strategic reserve continues to be top-of-mind for many Bitcoin advocates, who say that establishing such a nation-state-level BTC treasury is the subsequent step to making Bitcoin the global reserve currency and the usual financial unit of account.
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Dangers to the US greenback and different monetary markets
Establishing a Bitcoin strategic reserve might 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 by way of 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, creating a cascade of liquidations throughout monetary markets that might seemingly culminate in a important crash, as markets reply to the seismic shift in world finance, he concluded.
Journal: US risks being ‘front run’ on Bitcoin reserve by other nations: Samson Mow
