Introduction to Bitcoin Reserves
The United States is unlikely to add more Bitcoin to its reserves beyond what it has already seized, according to BitMEX co-founder Arthur Hayes. This is due to the country’s high debt levels and the stereotype surrounding "Bitcoin bros." Hayes expressed his views in a recent interview, where he discussed the possibility of the US government printing money to buy Bitcoin.
Doubts Over Printing Money for Bitcoin
Hayes stated that the US is a deficit country and the only way it can create a Strategic Reserve is by not selling the Bitcoin it has already seized, which amounts to around 200,000 Bitcoin. However, he finds it hard to imagine any "properly elected" politician openly announcing plans to print money to buy Bitcoin, especially given the popular narrative surrounding Bitcoin enthusiasts. Hayes questioned whether this would be a desirable policy, given the stereotypes associated with Bitcoin users.
The US Bitcoin Reserve
On March 6, US President Donald Trump signed an executive order to create a Bitcoin strategic reserve and digital asset stockpile in the US. The US currently holds 198,012 Bitcoin, worth over $18 billion, primarily formed from Bitcoin seized in criminal and civil cases. Many crypto industry leaders believe that if the US government starts buying Bitcoin, it could trigger an aggressive domino effect, with smaller countries struggling to acquire the cryptocurrency.
Global Competition for Bitcoin
Sergej Kunz, co-founder of exchange aggregator 1inch, predicts that if the US starts buying Bitcoin for a strategic reserve, countries will soon compete to own more Bitcoin. Kunz stated, "I’m pretty sure we’ll soon see countries battling over who owns more Bitcoin. The US will start." This competition could lead to a significant increase in demand for Bitcoin, potentially driving up its price.
Bitcoin and Altcoin Rotation
Hayes remains confident that the Bitcoin cycle leading into altcoin season will follow the same pattern as it did in 2021. He believes that Bitcoin dominance will return to around 70%, and then investors will start rotating into altcoins. Hayes stated, "It’s back at all-time highs; bull markets are back, and altcoins should outperform." However, he noted that the success of altcoins depends on which ones are chosen.
Bitcoin Dominance
Bitcoin dominance, the ratio of Bitcoin’s market capitalization to the entire crypto market, is currently 64.78%. This represents an 11.68% increase since January 1, when Bitcoin dominance was hovering just below 60%. Some analysts had predicted that Bitcoin dominance would not return to 70%, with targets ranging from 60%. The increase in Bitcoin dominance has sparked debate among analysts about the potential for altcoin season.
Conclusion
In conclusion, the US is unlikely to add more Bitcoin to its reserves due to its high debt levels and the stereotype surrounding Bitcoin enthusiasts. The potential for the US government to print money to buy Bitcoin is low, given the political implications. However, if the US does start buying Bitcoin, it could trigger a global competition for the cryptocurrency. The Bitcoin cycle is expected to follow the same pattern as in 2021, with Bitcoin dominance potentially returning to 70% before investors rotate into altcoins. As the crypto market continues to evolve, it will be interesting to see how Bitcoin dominance and the global demand for Bitcoin play out.
