- Trump’s strategic Bitcoin reserve pledge fuels crypto community optimism.
- Federal Reserve’s cautious stance contrasts amid growing market uncertainty.
As a seasoned financial analyst with over two decades of experience navigating the complexities of the global economy, I find myself intrigued by the ongoing saga of Bitcoin and its potential role within the U.S. government’s strategic reserves. The optimism among crypto enthusiasts regarding Trump’s pledge to establish a strategic Bitcoin reserve is not unfounded, given the potential benefits such a move could bring.
After Donald Trump’s election as the 47th U.S. President, there’s a sense of anticipation in the cryptocurrency world regarding his previous promise to create a special Bitcoin savings account.
At the Bitcoin 2024 conference held in Nashville, Trump articulated his dedication towards this project, stirring excitement amongst cryptocurrency aficionados.
Will the Fed act as a hindrance in Trump’s Bitcoin Reserve vision?
Indeed, Jerome Powell’s remarks at a recent press conference underlined that the Federal Reserve has no intention of participating in any government-led endeavor to amass Bitcoin.
Powell had earlier stated,
Currently, we don’t have the right to hold Bitcoin, as it is regulated by the Federal Reserve Act. However, we are content with our current assets and see no need for a change in the law.
After the monetary policy discussion, his remark sparked market unease, leading Bitcoin’s value to pull back from its latest peak prices.
Nevertheless, as of the latest update, BTC was trading at $98,703.53. This marked a 5.18% increase in the past 24 hours, according to CoinMarketCap.
Based on Powell’s remarks, the probability that a Bitcoin Strategic Reserve will come into being, as suggested by the forecast from prediction platform Polymarket, has been trending downward.
At first reaching 40% on December 18th, it has now decreased to 32%, indicating a lower likelihood.
At the same time, it’s worth noting that the overall market value of cryptocurrencies has also experienced a substantial drop, amounting to roughly 7.5%. This decline suggests that there is a certain level of doubt or instability in the market.
What to expect?
In other words, even though the Federal Reserve has a lot of autonomy when it comes to monetary policy, it doesn’t have the final say on establishing a Bitcoin Strategic Reserve.
If the Trump administration decides to move forward with this plan, it might be best to enact an executive order immediately upon taking office. This order should instruct the U.S. Department of the Treasury to use the Exchange Stabilization Fund (ESF) to buy Bitcoin directly.
To sum up, it seems that setting up a strategic Bitcoin reserve is more about the Treasury Department taking the lead, whether by direct action or backing from legislation, instead of the Federal Reserve.
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2024-12-25 21:11