CryptoQuant’s CEO Ki Young Ju says the US could offset a part of its national debt if it established a reserve for strategic Bitcoin (BTC), a step he calls practical, yet politically difficult.
Ki shared the analysis in a social media post on Dec. 25, where he highlighted that $790 billion in capital inflows have propelled Bitcoin’s market cap to $2 trillion over the past 15 years. In addition, he said that inflows of $352 billion this year contributed to an additional $1 trillion market capital.
Although the idea is feasible, it will be difficult to implement. Ki explained:
“However, using a pumpable asset like Bitcoin to offset dollar-denominated debt — rather than gold or dollars — could make gaining creditors’ consensus challenging.”
Bitcoin Reserve
Analysts think that using Bitcoin as a reserve instead of gold or US dollars could cause creditor relationships to be complicated. Bitcoin’s price history shows significant fluctuations, with notable peaks and troughs, raising questions about its suitability as a stable reserve.
They also claim that the establishment of a Strategic Bitcoin Reserve could be a first symbolic step towards achieving wider acceptance.
Ki said that if the US government classified Bitcoin as a strategy asset, it could be possible to offset 36% of US domestic debts by 2050 by purchasing 1 million Bitcoins. This represents a shift in thinking about debt management, potentially reducing the nation’s reliance on inflationary monetary policies.
This strategy may be resisted by the remaining 30% held by creditors abroad. Analysts stressed, however, that the strategy does not require the settlement of all national debt in Bitcoin. That could increase its practicability.
Economic buffer
Matthew Sigel of VanEck’s digital asset research department explored this proposal in more detail. He calculated the US Treasury could accumulate one million Bitcoins over a period of five years, at an initial price of $200 per coin.
Sigel’s analysis indicates that Bitcoin price growth could significantly impact the value of reserves relative to the national debt by 2049. According to the analysis, under favorable growth conditions the reserve would be able to cover a significant portion of debt. This could create a new economic buffer in the future.
The concept is speculative but it highlights the growing interest for alternative strategies to manage national debt using digital assets, as the cryptomarket matures. Proponents argue that Bitcoin’s decentralized nature and scarcity could position it as a hedge against inflation, potentially offering long-term financial stability.
Still, widespread adoption would require regulatory clarity and international cooperation to ensure Bitcoin’s seamless integration into national reserves.
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