A move that seemed wild just a few years ago is seriously considering retaining Bitcoin reserves as part of its fiscal strategy.
It began when Trump, who has yet to be elected, mentioned the idea on the campaign trail as part of his plan to make the United States the “crypto capital of the world.” Since taking office, one of the executive orders he signed on his first day proposed new regulations and created a committee to investigate the creation of a national cryptocurrency reserve.
In an attempt to take advantage of the creation of a federal Bitcoin Reserve, 15 states have passed or introduced statewide Bitcoin reserve bills, including Alabama, Arizona, Florida, Kentucky, Massachusetts, Montana, New Hampshire, Ohio, Ohio, Oklahoma, Pennsylvania, South Dakota, Texas, Texas, and more. Pennsylvania was the first to propose it in the bill last November.
What exactly is Bitcoin Reserve?
Bitcoin reserves are essentially government-owned and controlled stashes of Bitcoin, just like the number of countries that hold gold, silver, jewels, or oil reserves.
The reason behind it – the most basic basics of investment. Diversify your investments. Like gold, Bitcoin shows that it is a hedge against inflation. When the dollar loses its value, people look for alternative ways to save their wealth. Ideally, it’s a place that hasn’t lost its value. All major recessions show that gold charts are on the rise, and more recently Bitcoin. For this reason, he earned the nickname “Digital Gold.”
How accurately does the state or federal government get Bitcoin?
So far, the proposal has sold some of the existing reserves and used them to buy Bitcoin. Other proposals include changes to the state’s annual budgets that will redistribut the funds, including lawmakers in Oklahoma, New Hampshire and Pennsylvania.
Other states believe that residents who are crypto fans are willing to donate some of them just to show support for the concept.
Finally, Texas has raised the idea of allowing residents to pay taxes and fees in Bitcoin, and these payments went directly into state preparations and were not touched for five years.
How does this affect the overall market?
All analyses seem to conclude that this causes important spikes, and there is a combo of factors that work together in a way that allows you to send a price. There are record numbers of wallets owned by investors who buy and hold Bitcoin, leaving them untouched no matter what the market is doing. Secondly, the number of companies with Bitcoin on their balance sheets is increasing.
This means that governments, businesses and individuals will hold Bitcoin for a long period of time and will not sell it anytime soon. Currently, there are only 20 million bitcoins in the circulation, of which 6 million people sit in wallets that have lost their keys for access by their owners (from the early days when Bitcoin was worth a few cents, people have not carefully backed up the keys in wallets holding thousands of bitcoins).
Imagine this. Those who own Bitcoin are not seeking sales, and dozens of countries are following the US lead and will begin creating their own Bitcoin reserves as Bitcoin holders are not seeking sales. If someone who holds Bitcoin is not willing to sell, then there’s only one option left – change your mind by offering more. Some people cite this as a road to a $1 million Bitcoin price, and while I think the number is unrealistically high, I agree that it is the path to setting a new record high.
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author: Oliver Redding
Seattle News Desk / Break the code news