A Bitcoin strategic reserve may be bad for BTC and USD — Crypto exec

Establishing a nationalist Bitcoin (BTC) strategical reserve whitethorn make antagonistic marketplace impacts for BTC and the US dollar, according to Haider Rafique, planetary managing spouse for authorities and capitalist relations astatine crypto speech OKX.

Rafique told Cointelegraph that immoderate authorities holding important portions of the BTC supply could manipulate prices by dumping its holdings onto the market, thereby disrupting the halfway proposition of BTC arsenic neutral, decentralized money. 

He asked: “What happens successful a fewer years if a caller medication decides this was a atrocious idea?” Rafique added:

“Despite caller bipartisan enactment for crypto, it is indispensable to retrieve that administrative policies tin alteration quickly. As circumstances alteration implicit time, the attraction of ample amounts of BTC connected a country’s equilibrium expanse could correspond a liquidation risk.”

A breakdown of nation-state vulnerability to Bitcoin. Source: Bitcoin Policy Institute

The German authorities was an illustration of this successful 2024 erstwhile it unloaded 50,000 BTC, which kept prices suppressed beneath the $60,000 level, Rafique said.

The Bitcoin strategical reserve continues to beryllium top-of-mind for galore Bitcoin advocates, who accidental that establishing specified a nation-state-level BTC treasury is the adjacent measurement to making Bitcoin the planetary reserve currency and the modular monetary portion of account.

Related: US lawmakers pat Saylor, Lee to beforehand Bitcoin reserve bill

Risks to the US dollar and different fiscal markets

Establishing a Bitcoin strategical reserve could make a contagion that wouldn’t conscionable beryllium constricted to crypto markets and would person wide macroeconomic effects, Rafique told Cointelegraph.

“The astir important macroeconomic accusation would beryllium a nonaccomplishment of assurance successful the dollar,” helium said.

Building a Bitcoin reserve signals that the US dollar, which underpins the planetary economy, is anemic and cannot prolong its worth connected economical spot alone, helium added.

This could nonstop shockwaves done the full fiscal strategy arsenic investors fly the US dollar for safe-haven assets specified arsenic golden oregon the Swiss franc, Rafique said.

Investors would besides dump risk-on assets, creating a cascade of liquidations crossed fiscal markets that would apt culminate successful a important crash, arsenic markets respond to the seismic displacement successful planetary finance, helium concluded.

Magazine: US risks being ‘front run’ connected Bitcoin reserve by different nations: Samson Mow