JellyC Research is exploring the potential implementation of a Strategic Bitcoin Reserve (SBR) in the United States. The impact of such a move would be a game changer for the digital asset space. Currently, Polymarket odds indicate a 33% chance that Donald Trump will introduce an SBR within his first 100 days in office. In the last week, social media has begun to speculate that Donald Trump may be planning to implement an SBR as soon as his first day in office. This article begins with the basics, delves into the history, highlights the strategic benefits of Bitcoin for the U.S. Government, and then details how the SBR would function and be implemented.

Understanding Bitcoin

Bitcoin (BTC) stands out as a revolutionary financial asset due to its unique properties:

Fixed Supply: Bitcoin’s total supply is permanently capped at 21 million.
Pre-programmed Issuance: Bitcoin mining introduces new coins at a predetermined rate, halving approximately every four years to ensure scarcity.
Cryptographic Security: Transactions are safeguarded by advanced cryptography, ensuring blockchain integrity and resilience.
Pseudonymous Transactions: Transactions are publicly recorded while maintaining user pseudonymity, offering transparency without direct identity exposure.

Bitcoin’s evolution from niche to mainstream

2009–2013: Initially, Bitcoin gained traction primarily among technology enthusiasts.
2013–2017: Broader media coverage and the emergence of a wider cryptocurrency ecosystem boosted public awareness.
2017–2020: Institutional adoption increased with Bitcoin futures contracts, signalling financial legitimacy.
2020–2021: Amid expansionary monetary policies during COVID-19, Bitcoin’s value surged, reaching $69,000 in November 2021.
2022–2024: Regulatory scrutiny followed high-profile collapses like FTX, Celsius, and Luna. However, the SEC’s approval of Bitcoin ETFs in January 2024 has encouraged widespread adoption, as seen with BlackRock’s IBIT ETF. Donald Trump’s election victory in November 2024 further boosted Bitcoin adoption due to his pro-crypto stance, including a proposed Strategic Bitcoin Reserve (SBR).

What are the strategic benefits of Bitcoin for the U.S. Government?

1.Technological and Economic Leadership:

Supporting Bitcoin fosters innovation and strengthens U.S. leadership in technology and finance.
Bitcoin complements USD-backed stablecoins, which promotes dollarisation globally and increases demand for U.S. debt. This counters declining US Treasury holdings by nations like China.
While adversaries like China and Russia focus on physical gold, Bitcoin represents a modern “digital gold” alternative for the U.S.
Bitcoin reserves would serve as a hedge against ballooning U.S. public debt, which now totals $36.2 trillion.

2. National Security and Geopolitical Strategy:

Bitcoin and USD stablecoins offer alternatives to China’s and Russia’s emerging financial networks, such as the BRICS Bridge.
Bitcoin’s neutrality and resistance to confiscation make it a compelling reserve asset for developing nations and individuals choosing between competing models.

3. Grid Stability, Climate Goals, and Energy Development:

Bitcoin mining’s dependence on electricity incentivises the use of cheap and surplus energy.
Miners enhance grid stability by acting as flexible energy loads, stabilising supply-demand imbalances and monetising otherwise wasted energy, such as flared natural gas.
Bitcoin supports renewable energy expansion by consuming excess energy during low-demand periods.
Collaborations with nuclear energy initiatives and synergies with AI industries ensure energy innovation and the retention of technological capabilities within the U.S.

4. Human Rights and Financial Inclusion:

Bitcoin promotes financial freedom and aligns with U.S. values of liberty and innovation.
It provides a savings mechanism for the unbanked and those in authoritarian regimes, safeguarding wealth from seizures or devaluation.
Supporting Bitcoin reinforces U.S. commitments to global democratic values and financial empowerment.

*Image of Marathon sustainable energy solutions*

How a Strategic Bitcoin Reserve Would Work

The SBR would function as a Treasury-managed reserve to diversify assets, enhance economic resilience, and project global financial leadership.

Key Features:

Parallels with Existing Reserves: Similar to the Strategic Petroleum Reserve or Bullion Depository, the SBR would hedge against inflation, stabilise markets, and fortify national security.
Monetary Independence: Unlike fiat currencies, Bitcoin minimises inflation and operates outside centralised monetary systems.
Operational Details:
- Managed by the Department of Treasury, with public audits and cryptographic proof of reserves for transparency.
- Acquisition methods: open market purchases, seized assets, mining operations, tax payments, or a combination thereof.
- Secured through advanced multi-signature cold storage solutions, with state-of-the-art protocols to prevent breaches.
- Sized to balance strategic purposes without destabilising markets or undermining confidence in the U.S. dollar.

Potential Uses:

Integrating Bitcoin into energy policy and financial innovation strategies.

Steps Toward a Strategic Bitcoin Reserve

Other Considerations

In June 2024, Republican Senator Cynthia Lummis proposed the “BITCOIN Act,” advocating for the U.S. to purchase 1 million Bitcoins over five years to address the $36.2 trillion national debt.
Micro-Strategy’s Michael Saylor compares the purchase of BTC by the United States to historical precedents such as the purchase of Manhattan in1626, Louisiana in1803, California in1848, and Alaska in 1867. The question Saylor asks is not whether the U.S. should purchase BTC, but what multiple of the Lummis Bill (1.2 million BTC) it should acquire. He speculates that buying 4.2 million BTC in the next five years would result in a $56 trillion valuation in 2045.
Russia recently announced plans to establish its own strategic Bitcoin reserve, adding urgency to U.S. deliberations. Other countries investigating a Bitcoin Reserve include Brazil and Poland.
Several states are looking into a Strategic Bitcoin Reserve, including Pennsylvania and Texas.

Conclusion

A Strategic Bitcoin Reserve could position the United States as a leader in financial innovation, bolster national security, and support economic resilience. By integrating Bitcoin into its asset portfolio, the U.S. can counter geopolitical rivals, advance renewable energy goals, and champion financial inclusion and democratic values.

If the U.S. adopts an SBR, it will transform the digital asset landscape. JellyC Research sees evidence that BTC is being purchased in advance of the SBR being approved. The long-term price action of BTC will depend on the details of the SBR. If Trump and the U.S. Republican Party adopt Michael Saylor’s recommendations, expect BTC to challenge the market capitalisation of gold ($16 trillion) sooner rather than later.

Disclaimer

This article ("Article") has been prepared for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any financial product or service. This Article does not form part of any offer document issued by JellyC Pty Ltd (CAR Number 001293184), a corporate authorised representative of TAF Capital Pty Ltd (ACN 159 557 598, AFSL 425925). Past performance is not necessarily indicative of future results, and no person guarantees the performance of any financial product or service mentioned in this Article, nor the amount or timing of any return from it.

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The Growing Importance of a Strategic Bitcoin Reserve