What you need to know about strategic reserves
Name implies a reserve that is available to be used in future situations.
In the US, the government maintains a stockpile of one million barrels of diesel fuel spread between Massachusetts, New Jersey and Connecticut — a trove of oil to be released to heat homes and businesses should there be a supply disruption somewhere down the line.
It is similar to the strategic reserve for grains, only it’s used as a vital food ingredient.
It is not necessary that they directly benefit the public. The government also used to hoard helium in order to use it as blimps for the military. However, today, this is handled by the private sector, who uses the helium for superconductors and rockets.
For what purpose would you use a cryptocurrency reserve? A portfolio of randomly selected coins could help mitigate a future catastrophe.
The easiest way to achieve this is by creating a bitcoin-only reserve. As far as coins go, it’s obviously the most resistant to major long-term corrections — it has always bounced back from its semi-regular 80% drawdowns.
BTC is also effectively uncorrelated with the rest of the crypto market — because it almost always leads it. This makes BTC the ideal choice as a reserve.
Bitcoin’s main modern application is to buy and hold long-term. This is as close as any of our strategic reserves come right now to a goal that is overarching. One day the US might sell some bitcoins to pay down debts or fund projects for the good of the country.
The nearest things we have right now to a US strategic crypto reserve are the $20 billion BTC seized through criminal cases over the years — which is still on track to be liquidated at some point, although perhaps not in the short term.
There’s also the increasing strategic reserve that Trump’s World Liberty Fi project, which is a DeFi-based initiative, maintains. The project has spent more than $300 million since November on different currencies, including ETH.
After moving the majority of World Liberty Fi’s reserves to Coinbase Prime earlier in this month, it is harder to determine their value. After piecing onchain data together I determined that this portfolio had a value of just under $261m earlier today.
The blue line in the graph above shows the performance of the position.
TRX is the only hold still green, but only barely, with ENA the worst — World Liberty Fi is down around $2.7 million on its ENA positions right now. Bitcoin is the main asset in this portfolio, as it has a loss of around $30 million in ETH but a gain of $5 million for BTC.
There may be no need for World Liberty Fi to have a strategic reserve, aside from the basic treasury-management common to most crypto projects. Not to mention, Lightspeed’s Jack Kubinec’s reported token exchange deals.
It will be necessary to manage the crypto portfolio of World Liberty Fi, especially when it comes to the next market downturn.
Labeling World Liberty Fi as “if World Liberty Fi portfolio falls further” “strategic” It could be embarrassing.
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