The trend of sovereign countries establishing BTC reserves is irreversible. It can even be said that the BTC competition among sovereign countries has already begun. Currently, multiple sovereign countries hold BTC, among which El Salvador is the most well-known. The Abu Dhabi Sovereign Wealth Fund is involved in bitcoin mining.
Looking around the globe, the call for BTC reserves is growing louder day by day:
· Donald Trump, the elected president of the United States, talked about strategic bitcoin reserves on the stage in Nashville related to bitcoin.
· U.S. Senator Cynthia Lummis put forward a draft legislation on strategic bitcoin reserves.
· Brazilian Congressman Eros Biondini officially proposed to establish a national strategic bitcoin reserve plan — “Reserva Estratégica Soberana de Bitcoins”, abbreviated as RESBit.
· Satoshi Hamada, a member of the Japanese Senate, officially submitted a proposal to the Diet on December 11 to discuss the establishment of a national bitcoin reserve.
These proposals undoubtedly echo the trend of promoting the establishment of bitcoin reserves on a global scale. Similar proposals have also emerged in countries like Russia and Poland.
Why do sovereign countries need bitcoin reserves?
The demand of sovereign countries for bitcoin is actually a response to the current international economic situation. Here are three major reasons why bitcoin reserves have become a global trend:
Hedging Against Geo-economic Risks
In the context of the current turmoil in the international economic situation, traditional fiat currencies are facing inflationary pressures, while the liquidity and convenience of traditional reserve assets like gold are limited. As a decentralized global asset, bitcoin is not restricted by regions or currency systems, providing sovereign countries with a new option to hedge economic risks.
Currency Strategy in the Digital Age
Entering the digital economy era, the competition among countries has shifted from the scramble for traditional resources to the competition for digital assets. As a representative asset of blockchain technology, the value of bitcoin is reflected not only in the economic aspect but also in technological leadership and the strategic layout of national fintech.
The Need for Diversification of Reserve Assets
Traditional foreign exchange reserves (such as the U.S. dollar) are subject to numerous restrictions in international economic relations. As a globally universal asset, bitcoin is not affected by the policies of a single country. For some emerging economies, holding bitcoin can enhance their economic independence and reduce their dependence on the traditional monetary system.
How Will the Bitcoin Reserve Competition Affect the Global Economy?
Expansion of the Exposure of the Crypto Industry
As more and more countries include bitcoin in their reserve assets, the overall exposure of the cryptocurrency industry will also increase significantly. This will not only attract more institutional investors into the market but also promote the development of more financial instruments (such as bitcoin ETFs, bitcoin bonds, etc.).
Driving the Continuous Rise of Bitcoin Prices
The purchase of national reserve assets is long-term and on a large scale, which means that the demand for bitcoin will continue to increase. With limited supply, the scarcity of bitcoin will be further enhanced, and its price is expected to enter a new growth cycle. So, you can see that BTC has already broken through $100,000 and the upward trend remains strong.
Impact on the Existing Reserve System
The rise of bitcoin may gradually change the global reserve currency system with the U.S. dollar at its core. Although it is unlikely that bitcoin will completely replace the U.S. dollar, as a supplementary reserve asset, the value of bitcoin is being widely accepted. This also makes traditional foreign exchange reserve countries need to reexamine their asset structures.
The Mutual Influence Between Digital Currencies and Central Bank Policies
With the increased acceptance of bitcoin by sovereign countries, a symbiotic relationship may form between central bank digital currencies (CBDCs) and bitcoin in the future. On the one hand, the decentralized nature of bitcoin can provide a more flexible reserve method; on the other hand, CBDCs provide countries with more means of control, and the combination of the two may build a brand-new digital economic system.
Further Integration of Traditional Finance and the Crypto World
The participation of sovereign countries will further narrow the gap between the traditional financial system and cryptocurrencies. For example, central bank digital currencies (CBDCs) may form a complementary relationship with bitcoin reserves and jointly build the framework of the future financial system.
The Global Evolution from Bitcoin Reserves to the Digital Economy
As more and more countries incorporate bitcoin into their strategic assets, the role of bitcoin is undergoing a fundamental transformation. It has evolved from a “private currency” to an asset at the national level, marking the maturity of the cryptocurrency market and also an important signal that the global financial landscape is entering a new era.
The future global economy may be connected by bitcoin, linking different countries, industries, and individuals. This is not only the result of a technological revolution but also an inevitable choice for the global economic system to adapt to the new era. The bitcoin reserve competition has just begun. It will shape a new financial order and also bring more possibilities to human economic activities.
The actions of sovereign countries in building bitcoin reserves represent an irreversible trend. It not only pushes bitcoin into the mainstream but also paves the way for the future development of the digital economy. In the wave of global economic changes, bitcoin is becoming a crucial driving force.
It can be said that sovereign countries can no longer afford to ignore BTC.
