Establishing a nationwide Bitcoin (BTC) strategic reserve could create damaging market impacts for BTC and the US greenback, in response to Haider Rafique, international managing accomplice for presidency and investor relations at crypto trade OKX.
Rafique instructed Cointelegraph that any authorities holding significant portions of the BTC supply 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 couple of years if a brand new administration decides this was a nasty thought?” Rafique added:
“Regardless of current bipartisan assist for crypto, it’s important to keep in mind 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 symbolize a liquidation threat.”
The German authorities was an instance of this in 2024 when it unloaded 50,000 BTC, which stored costs suppressed under the $60,000 degree, 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 following 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 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 can be a lack of confidence within the greenback,” he mentioned.
Constructing a Bitcoin reserve alerts that the US greenback, which underpins the worldwide economic system, is weak and can’t maintain its worth on financial power alone, he added.
This might ship shockwaves by the complete monetary system as buyers flee the US greenback for safe-haven belongings akin to gold or the Swiss franc, Rafique mentioned.
Buyers would additionally dump risk-on belongings, making a cascade of liquidations throughout monetary markets that might possible culminate in a major crash, as markets reply to the seismic shift in international finance, he concluded.
Journal: US risks being ‘front run’ on Bitcoin reserve by other nations: Samson Mow
