Will U.S. Go All In On Bitcoin? CryptoQuant CEO Doubts

As BTC soared past $108,000 on December 17, 2024, following President-elect Donald Trump’s proposal to establish a national Bitcoin reserve, debates over its feasibility and purpose have intensified.

While some view it as a strategic move to cement U.S. dominance in global finance, critics argue it exposes taxpayers to unnecessary risks.

CryptoQuant CEO Ki Young Ju questioned the proposal’s practicality with a post on X on December 28, arguing the conditions under which the U.S. might adopt Bitcoin as a strategic asset.

Donald Trump’s Vision

Trump’s vision for a “Strategic National Bitcoin Stockpile” is modeled on the Strategic Petroleum Reserve, established in 1975 during the oil crisis.

He first announced this plan at a Bitcoin conference in Nashville in July 2024. Trump suggested that cryptocurrency seized in criminal prosecutions, currently amounting to 198,109 BTC ($18.9 billion according to BitcoinTreasuries), could form the foundation of the reserve.

Proponents argue that the reserve could give the U.S. leverage over Bitcoin’s limited supply, capped at 21 million coins, of which 19.79 million are already in circulation.

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This could discourage other nations from adopting BTC as an alternative to the dollar and cement the U.S. dollar’s position as the world’s reserve currency.

U.S. Government Bitcoin Dominance

The United States is already a leader in Bitcoin mining, generating 37.8% of the global hash rate as of 2022 (Energy Information Administration).

Senator Cynthia Lummis of Wyoming added momentum to the reserve idea in July 2024 by proposing a bill for the government to acquire 1 million BTC over five years.

Tyler Cowen, an economics professor at George Mason University, wrote in Bloomberg that a Bitcoin reserve could bolster the dollar’s dominance. By controlling a significant portion of th supply, the U.S. could ensure its continued leadership in the global financial system.

Despite these advantages, many experts are skeptical. Unlike oil, Bitcoin is not essential for running the economy or national security.

Padhraic Garvey, ING’s regional head of research, Americas, argued that a Bitcoin reserve might primarily serve to increase U.S. influence over the asset rather than benefit the broader economy.

Economist Ramaa Vasudevan from Colorado State University warned of potential risks. She mentioned in an interview,

“The fund would provide Bitcoin speculators the assurance that when the crash comes, the State will deploy this fund to rescue it.”

Establishing a reserve could expose taxpayers to bailouts in the event of a market crash.

CryptoQuant CEO’s Perspective

Ki Young Ju added a layer of caution to the debate. While he expressed personal support for Bitcoin, he noted that the U.S. is unlikely to embrace it as a strategic reserve unless its economic dominance is genuinely threatened.

“Market sentiment still shows confidence in the U.S.’s global supremacy,” he wrote on X.

Historically, the U.S. has turned to strategic assets like gold during periods of economic uncertainty. Bitcoin, Young Ju suggests, could follow a similar trajectory if global conditions shift.

However, for now, he views Trump’s Bitcoin reserve proposal as a calculated political move rather than a concrete financial strategy.

As Trump prepares to take office, questions remain about the long-term viability of his Bitcoin reserve proposal.

Whether it becomes a cornerstone of U.S. financial policy or fades as campaign rhetoric will depend on how the administration navigates the balance between innovation and risk in the world’s largest economy.