Many nations, including the United States, are grappling with escalating federal debts and rising inflation rates that threaten to diminish wealth. Is there a more effective approach to safeguarding wealth against inflation or economic uncertainties?
According to Brian Armstrong, the CEO of Coinbase, Bitcoin [BTC] emerges as a superior hedging option, particularly following the cryptocurrency’s milestone achievement of reaching $100,000.
Highlighting BTC’s growth over the past 12 years, Armstrong pointed out that an initial investment of $100 in 2021 would now be valued at $17 in traditional terms. However, in BTC value, that $100 would have surged to $1.5 million. He advocated for governments to contemplate incorporating BTC reserves as a means to uphold wealth. He stated,
“Bitcoin stands as the top-performing asset over the past 12 years, and we are still in the early stages. Every government, especially those seeking a safeguard against inflation, should establish a strategic Bitcoin reserve.”
Assessment of the Potential U.S. Bitcoin Reserve
The endorsement of a BTC reserve by Armstrong carries significant weight, considering his role in supporting pro-crypto political candidates during the 2024 U.S. elections.
President-elect Donald Trump has pledged to position the United States as the “global hub for cryptocurrencies” and establish a national Bitcoin reserve.
Will Trump deliver on his promise? Recently, the U.S. government initiated a transfer of $2 billion in BTC, a portion of which is allocated for the proposed reserve.
Presently, the market sentiment appears somewhat skeptical about the prompt establishment of the reserve within the initial 100 days of Trump’s administration.
According to predictions from the Polymarket platform, there is only a 24% likelihood of the national BTC reserve materializing.
Contrastingly, Kalshi predicts a 55% chance of the U.S. creating a Bitcoin reserve prior to 2026.
Meanwhile, other nations like Brazil have also entertained the notion of a BTC reserve. Industry experts believe that a sanctioned U.S. Bitcoin reserve could spark a domino effect, compelling other countries to follow suit.
The ultimate objective would be to propel the value of BTC to new heights, with certain analysts foreseeing the coin’s valuation potentially skyrocketing to seven figures. At the moment, BTC is trading at $102,500, reflecting a 6% increase over the past 24 hours.