There are four reserve assets that the US Government has. Why should bitcoin not be added to the list?
If Senator Cynthia Lummis, a bitcoin enthusiast, gets her wish the US Government will buy 1 million BTC over a five-year period ($67.7billion) to boost Treasury Coffers. The US government manages a strategic bitcoin reserve.
Donald Trump also floated another plan, which would prevent the US from continuing to sell its Bitcoins at Bitcoin2024 in Nashville.
Trump wants the US to hold onto the remaining 213,240 BTC, which is $14.85 billion. The authorities confiscated the BTC in various criminal cases like the Bitfinex and Silk Road hacks.
Lummis, however, has stated that she intends to include a strategic reserve as part of upcoming legislation in Congress.
If the US began to consider bitcoin an official reserve asset — which sadly feels unlikely — then as it stands, seized BTC would contribute 1.74% of the US’s total official reserves at current prices ($14.85 billion out of $854.3 billion).
The US largest asset is gold. Or, more precisely, gold certificates. US holds certificates denominated in dollar equivalent to 261,5 million troy ounces fine gold.
Since 1973, the Fed has valued these certificates at 42.22 per ounce. The current price of gold is nearly $2400. This gives the Fed’s certificates an estimated market value $608.35 billion.
Also, there are $166.21 Billion in claims on Special Drawing Rights (SDR), an asset held by the International Monetary Fund as a reserve.
SDR is an international liquidity pool that currently has a value of $943 Billion. It’s a liquid asset from which any country can borrow. The SDR is a collection of currencies, including the US Dollar, Euro, Chinese Renminbi (renminbi), Yen, and Sterling.
US Reserves also include $35.2 billion of foreign currency in euro and yen. An additional $29.6 million can be quickly withdrawn (independently from the pool of SDRs) from the IMF.
US reserves are made up of various valuable items, such as oil (374 million barrels worth $29.9billion). Oil isn’t an official asset reserve like foreign currency or gold.
If Lummis’ plan became reality, here’s how US reserves would look.
Looking forward is difficult, as it would mean predicting bitcoin’s price. You can run the strategy for her over the last five years.
Had Lummis’ plan to buy one million BTC started five years ago — buying the same amount of BTC each month — then the US would now be sitting on $69.44 billion in bitcoin, including its seized criminal stash.
It’s shocking to think that US dollars would have been spent “only” $31.4 billion to acquire one million BTC — which works out to be 120% unrealized profit.
Even then, it would take some luck on the market. Lummis may be onto something.
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