The Edge weighs the wisdom of having a national stockpile on Jan 27, 2025.

by Kuek Ser Kwang Zhe

As is the case for most interviews, we were sent a bunch of questions and answers get edited. The crux of our written opinion was as follows:

Q: If the Bill goes through, which will see the US Secretary purchasing not more than 200,000 Bitcoins per year over five years, for a total acquisition of 1 million Bitcoins, what is the potential impact on the price, liquidity and market dynamics of the global Bitcoin/ crypto markets? Who are the biggest beneficiaries and losers (if any)?

A: Having a strategic reserve can be self-serving as it mainly benefits those who hold bitcoins. It is also ironic on two levels:

 

First, instead of protecting the dominance of the US dollar and its potency as a sanctions tool, it may have the opposite effect of validating and hastening dedollarization around the world. Emerging markets and developing economies (EMDE) with weak currency systems have more reason to migrate to bitcoins as a store-of-value, and governments are further emboldened to build alternative dollar-free payment systems e.g. BRICS.

 

Second, the rest of the world have arguably more to gain than Americans themselves, as they are not the ones ‘left holding the bag’ as a sovereign reserve facility. In other words, they get to enjoy the bitcoin price pump without the risks and can expect the US Treasury to step in as ‘last resort’ if there are global price runs. Investors would be able to exit but the US Treasury can’t without a massive market meltdown.

The cover story can be viewed here in The Edge.