A US strategic BTC reserve

Context

There's a large Bitcoin conference kicking off in Nashville this week and Trump is scheduled to deliver a speech there.

Anticipation has been high and one of the rumblings about potential announcements centers around the creation of a BTC Strategic Reserve.

Let me make my stance clear: If the Republicans simply abide by what they've already promised to do, I'll be perfectly thrilled and call it super-bullish.

Still, the likelihood of the formation of an official US BTC Reserve has moved from zero to non-zero, and if it actually happens it would be absolutely game-changing so it's worth thinking through, being careful not to pass out from the industrial-level hopium fumes.

Macroscope (below), was already talking about BTC as part of the GOP platform two years ago. In a recent tweet he notes a BTC Reserve would be a "fundamentally productive move" and states the obvious:

It should go without saying that the current price doesn't even begin to reflect it. —MacroScope17

I'm still confident Trump doesn't understand Bitcoin yet, but he is surrounded by several trusted people who do. And if you can say one thing about Donald it's he's got a strong nose —and appetite— for big opportunities.

The argument I'm sure he understands perfectly is that at some point someone bigger than El Salvador —possibly China— is going to run with the opportunity.

I can also see him grasping this as an important race he can win, maybe without too much effort.

After all, the US is already the country with the largest (official) BTC holdings:

Arguably the first thing the US needs to do is not be Germany —which just spent a few weeks dumping 50,000 BTC with haste.

The US could simply declare the BTC they already own as a National Reserve Asset. That'd automatically put them at the lead of the nation-state adoption race and push the game theory —which was kicked off by El Salvador to the sound of global laughter— into overdrive.

As long-time Bitcoin critic and banana lover Mark Cuban notes in his "bending the knee" tweet a sudden global recognition of BTC as a safe-haven asset would push BTC's price "way higher than you think".

…you can’t align the stars any better for a BTC price acceleration. —Mark Cuban

OK, that's nice but who listens to Mark Cuban, really?

I'll see your Cuban and raise you a Fink. Last Monday, BlackRock's Larry Fink made an appearance on Jim Cramer's show. Guess what he talked about?

He admitted he had been wrong to be a "proud skeptic" and called BTC a legitimate asset and digital gold. He also said —two days after a failed assassination attempt on the leading US presidential candidate— it was a good asset to own if you were "frightened about the state of the world".

I'm sure billionaire Michael Dell was not the only one to find Larry's comments and timing "fascinating".

Is Trump for real?

He's a politician, so no. But he's also a opportunistic businessman, so maybe. We'll find out in due time, but it is interesting to note he dangled the keys to the US Treasury in front of JPMorgan's Jamie Dimon and it would seem to me one of the conditions was to bend the knee on Bitcoin (what other reason could Dimon have to "change his tune" all of a sudden after being such a loud hater?)

What about them Dems?

As you know by now, Jill was finally "persuaded" to end Joe's re-election run.

I'll leave my tinfoil hat off for the moment but have to agree with David 👇 everything about this announcement has been highly unusual.

Kamala was anointed by Biden's Twiter account after a very pregnant, 15 min or so caesura —a timely pause, kind of a strategic silence. Endorsements by Hillary and others quickly followed, notably Obama abstained from endorsing.

The final, official candidate for the dems will not be known until the DNC (I'd advise you to stock up on popcorn but I hear he's a bad dude).

Whomever the final candidate may be, it seems Elizabeth Warren is likely to lose support for her "anti-crypto army". The next candidate is unlikely to shoot themselves in the foot like Joe did, It's simply more profitable to be pro BTC.

The markets seem rather unconcerned with Kamala. The price of BTC dumped on the news of Joe's stepping down and pumped on his endorsement of Kamala.

Correlation with Mr. Market

The broader market framework for all of this has been interesting. Bitcoin has of late, been behaving as an uncorrelated asset to pretty much everything else.

Even BTC skeptics have to pay attention to a non-correlated asset.

And boy did BTC deliver on non-correlation last week

This is the kind of behavior you want to see in a safe-haven asset.

Broader View

There are other straightforward reasons for the US to jump on the BTC bandwagon.

Owning the Global Reserve Currency sounds like fun —and it is— for a while. It's kind of like having an endless supply of drugs. The parties are epic until you have to deal with addiction and rehab.

In this particular case, USD dominance has meant cheap abundance at the cost of outsourcing manufacturing to other countries. Cheap goods and fat bank accounts are attractive until you can no longer produce stuff you depend on and your supplier now owns a sizable chunk of your country.

Rather critically, US supply chains can no longer fulfill domestic military requirements.

It's surprising this was allowed to happen and more so that some higher-ups seem to not have gotten this memo yet. The "tough on China" stance has to be tempered with a simple reality:

If the US wants to fight China, it'll have to "buy its bullets" from China.

To make matters more interesting, China's banking sector seems to be having a come-to-jesus moment

To deal with the situation, they've had to dip into their fat US-denominated piggy bank and dump a bunch of assets to raise cash to deal with their crisis.

As stated in the tweet above, it's worth noting over 50% of the dumped assets were US Treasuries.

When we add that Japan (a huge UST whale) is facing a similar situation and the US needs to both sell and refinance a lot more debt, this doesn't look good for the UST market, arguably the linchpin of the fiat economy.

Luke Gromen asks the 100 Trillion dollar question: Is there appetite for all this debt?

Anything that makes USTs more attractive I'd count as a net win for the US, and it looks like the Treasury market could use a shot in the arm.

Blue Screens

Still keeping my tinfoil hat off, I'll make a quick observation about last week's curiously timed Crowdstrike failure:

Bitcoin did not even blink.

That BTC would be taken seriously as a Global Reserve Asset is something many of us expect to eventually happen.

The fact it could start happening NOW is surprising, if it happens it will mark the beginning of a whole new era. I don't know where price would land but my guess would be far, far from where it is now.

Price News

Bitcoin Surfing

Bitcoin jumped out of the Water ($61k) and above the Board ($64.2k) last week. Plenty of air above.

Dip Fishing

After dipping below $54k, price used the $56k resistance as a springboard all the way past $65k. It feels to me like $56k is the new floor but the only way I see us re-visiting it is if Elizabeth Warren becomes the new dem candidate : )

Calm Chart

July flipped green. With the current political situation in the US, I'll abstain from making predictions about whether it'll stay that way.