Trump has been a vocal Bitcoin supporter for some time now. His presence at the Bitcoin conference in Nashville, talking about Bitcoin and crypto whenever he gets a chance, shows that he has become pro-crypto. In a Twitter space, he mentioned that his kids taught him things about crypto.
During his speech in Nashville, Trump made an interesting promise: if elected president again, he plans to create a Bitcoin reserve for the United States using the Bitcoins seized by the government. This raises an important question: is it practical to create a national reserve from these government-held Bitcoins?
According to Arkham data, the U.S. government holds 203,236 Btc, which is worth over $13 billion. That’s around 1% of the total Bitcoin supply. There are multiple things to focus on before thinking about making a national reserve out of this government BTC holding.
In 2016, a crypto exchange known as Bitfinex was hacked for 119,256 BTC, valued at $72 million at that time and now valued at $7.7 billion. Out of these, 94,643 BTC were seized by the feds in 2022. Another 15,085 from the hack was moved to a U.S. government wallet. That makes a total of 109,728 BTC recovered from the hack. This accounts for more than half of the total government Btc holding.
After the breach, Bitfinex compensated its affected users within eight months, making the exchange the primary victim of the hack. If these coins are eventually returned to Bitfinex, the government would be left with only 93,511 BTC.
We all know the U.S. government holds a large volume of Bitcoin from the Silk Road case. The government seized 69,370 BTC stolen from the Silk Road in 2020. A long legal battle has been ongoing for these Silk Road-seized BTC, and last week, the court ruled that the U.S. can sell these coins.
Let’s say the government sells this Bitcoin. They would then be left with only 24,141 BTC, which is worth about $1.5 billion at a price of $64,754 per Bitcoin.
A Reality Check on National Debt
Considering the U.S. national debt, the situation becomes more complicated. The interest on this debt accumulates rapidly, totaling around $3 billion per day. After accounting for potential sales and returns, the remaining Bitcoin would only cover half a day’s worth of interest on this enormous debt.
The presidential candidate and former president Donald Trump is keen on making a Bitcoin reserve. Things can change for the U.S. There is also one more pro-crypto person in U.S. politics, Senator Cynthia Lummis, who proposes that the U.S. buy 1 million Bitcoin.
Taking all these factors into account, the idea of establishing a strategic Bitcoin reserve could have significant implications. For the broader crypto community, such a move could be a very bullish sign, fostering optimism and growth in the cryptocurrency space.
Is Trump’s vision for a Bitcoin reserve a game-changer for the cryptocurrency market? We’re eager to hear your views!
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