President Trump’s recent Strategic Bitcoin Reserve (SBR) creation by the US government has shocked the cryptocurrency world. The market responded by dropping the price of Bitcoin by 6% right away. However, this is good for Bitcoin’s longterm reputation and use. Industry leaders think this event will change how people worldwide think about Bitcoin, making it a more trustworthy and common currency. There are four main reasons why Trump’s Bitcoin reserve is a big deal in the crypto world.
- US Will Never Ban Bitcoin
One of the biggest worries for people who own Bitcoin has always been that the government might crack down on or even ban it. However, since the US officially holds Bitcoin as part of its strategic reserves, this is not likely to happen. Matt Hougan, Chief Investment Officer of Bitwise, said that the reserve “dramatically lowers the likelihood that the US government will someday “ban” Bitcoin.”
- Other countries will follow
Others suit after the US sets up a Bitcoin reserve. Hougan said that this move will give other countries a short time to “front-run” any possible US purchases of Bitcoin. As governments and central banks start to stockpile Bitcoin as a hedge against inflation and economic instability, more people around the world could use Bitcoin.
- No More Institutional Excuses
Big banks, pension funds, and foundations have hesitated to invest in Bitcoin for years because they don’t know how the government will react and are worried about the regulations. These groups no longer have a reason to stay out of Bitcoin now that the US government holds it. The research head at Bitwise, Ryan Rasmussen, said this move sends a clear message: “Other countries will buy BTC, wealth managers, financial institutions, pensions, and endowments have no excuse.”
- Global Bitcoin Legitimacy
The International Monetary Fund (IMF) and other financial watchdogs have long said that Bitcoin is a risky or even speculative currency. However, the US Bitcoin reserve makes it much harder for institutions worldwide to question Bitcoin’s credibility. The IMF recently told El Salvador it needed to limit how much Bitcoin it held, but now the world’s largest economy publicly recognizes BTC’s value.
Conclusion
Trump’s Strategic Bitcoin Reserve is a big deal for cryptocurrency. Even though the market was initially nervous, everyone in the business agrees that this move is perfect for Bitcoin.
