Establishing a nationwide Bitcoin (BTC) strategic reserve could create detrimental market impacts for BTC and the US greenback, in keeping with Haider Rafique, world managing companion for presidency and investor relations at crypto alternate OKX.
Rafique advised 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 just a few years if a brand new administration decides this was a foul concept?” Rafique added:
“Regardless of current bipartisan assist for crypto, it’s important to do not forget that administrative insurance policies can change shortly. As circumstances change over time, the focus of huge quantities of BTC on a rustic’s steadiness sheet may symbolize a liquidation danger.”
The German authorities was an instance of this in 2024 when it unloaded 50,000 BTC, which stored costs suppressed under the $60,000 stage, Rafique stated.
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 advised Cointelegraph.
“Essentially the most vital macroeconomic implication can be a lack of confidence within the greenback,” he stated.
Constructing a Bitcoin reserve indicators that the US greenback, which underpins the worldwide economic system, is weak and can’t maintain its worth on financial energy alone, he added.
This might ship shockwaves by way of all the monetary system as traders flee the US greenback for safe-haven belongings akin to gold or the Swiss franc, Rafique stated.
Buyers would additionally dump risk-on belongings, making a cascade of liquidations throughout monetary markets that might doubtless culminate in a big crash, as markets reply to the seismic shift in world finance, he concluded.
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