Will The Bitcoin Reserve Act Impact Crypto’s Four-Year Gains Cycle?

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As a seasoned researcher with over two decades of experience in the financial markets, I find the prospect of governments creating Bitcoin reserves intriguing and potentially transformative for the crypto market. Having witnessed the evolution of gold from a commodity to a safe-haven asset, I can see parallels between its journey and the current trajectory of Bitcoin.

Upon taking office, President-elect Donald Trump has expressed plans to issue an executive order for the establishment of a Bitcoin reserve. This announcement has sparked curiosity among many as they consider how such action might influence the ongoing four-year cycle of crypto market fluctuations (boom and bust) and potentially lead to what could be referred to as a prolonged period of growth, or a “crypto supercycle.

This year, Senator Cynthia Lummis from Wyoming was the one who presented the Bitcoin Reserve Act. Similarly, Texas and Pennsylvania have put forth suggestions for creating a state-owned Bitcoin reserve.

Can A Bitcoin Reserve Impact Current Cycles? 

Apart from the U.S., nations such as Russia, Germany, and Thailand are considering similar initiatives. If governments decide to accumulate Bitcoin (BTC), could this potentially influence crypto prices and the four-year cycle of growth and contraction associated with Bitcoin’s halving event? Some experts like Iliya Kalchev view the Bitcoin Reserve Act as a significant milestone for Bitcoin, indicating its growing acceptance as a valid financial tool. Already, major financial institutions have shown interest in Bitcoin by incorporating it into their reserves. Kalchev comments that this act could mark a turning point for Bitcoin.

In every Bitcoin cycle, there’s an ongoing story suggesting that ‘this time it’s unique’. The circumstances have arguably never been more favorable. Previously, cryptocurrencies didn’t have a U.S. president who is supportive of crypto and holds influence over both the Senate and the House of Representatives.

The Bitcoin Reserve Act proposes that the U.S. government may include Bitcoin in its financial reserves. This act specifies that the government should acquire 200,000 Bitcoins each year for five consecutive years and retain this asset for at least twenty years. Jack Mallers, head of Strike, suggests that President Trump might issue an order to procure Bitcoin. Yet, he clarified that such a move would not imply the acquisition of one million Bitcoins.

“It wouldn’t be the size and scale of 1 million coins, but it would be a significant position.”

According to Dennis Porter, one of the founders of the Satoshi Act Fund, a charitable organization that advocates for Bitcoin-friendly legislation in the United States, he speculates that President Trump might be contemplating establishing a reserve using an executive decree.

It’s been verified that President Trump is considering the issuance of an Executive Order establishing a ‘Strategic Bitcoin Reservation.’ The Treasury Department, utilizing the Exchange Stabilization Fund, has the power to maintain the strength of the U.S. dollar by purchasing currencies. In this context, Trump intends to employ this fund to acquire Bitcoins.

Is Bitcoin Already In A Supercycle?

According to Alex Kruger, an economist and founder of Asgard Markets, the recent election results suggest that Bitcoin could be in the midst of a supercycle. He likened Bitcoin’s current position to gold, which saw a dramatic increase from $35 per ounce in 1971 to $850 in 1981 following President Richard Nixon’s decision to remove the US from the gold standard. While Kruger didn’t completely dismiss the possibility of another bear market, he urged investors to compare this cycle with past ones.

A Domino Effect 

If this legislation is approved, it might trigger a competition among countries to establish their own strategic reserves of Bitcoin. Analysts predict that the passage of the Bitcoin Reserve Act would mark a significant milestone in global Bitcoin acceptance and potentially be one of the most exciting events in cryptocurrency history, driving a rush to acquire large amounts of BTC. Crypto investor and Bitcoin educator Chris Dunn suggests that this panic-buying trend from some of the world’s leading economies could significantly reshape the current crypto market dynamics.

Should the United States or another significant economic force begin to invest heavily in Bitcoin, fear of missing out (FOMO) might be triggered, leading to unique market cycles and supply-demand fluctuations that have not been observed before.

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2024-12-21 14:13