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What's Happening In Crypto Today: Trump wants to commit the U.S. to bitcoin

Jan 2, 2025
5 min read
Table of Contents
  • 1. Trump's Push for U.S. Bitcoin Commitment
  • 2. Emerging Bitcoin Proposals: Trump's Retention Strategy
  • 3. Current Context
  • 4. Opposition Views
  • 5. Growing Interest
  • 6. Conclusion

bitcoin-cryptocurrency-investing-width-1200-format-jpeg.jpg

What's happening in crypto today, it wouldn’t require much for the U.S. government to invest in Bitcoin, similar to its investments in gold — the real question is whether such a move would benefit its citizens.

Bitcoin price surges past $97750 on Thursday, rising 7% since MicroStrategy's latest BTC $200 million purchase on Monday December 29.
 


Trump's Push for U.S. Bitcoin Commitment


Today, the cryptocurrency landscape is buzzing with discussions surrounding President-elect Donald Trump's proposal to commit the U.S. to Bitcoin. This initiative emerged during the Bitcoin 2024 conference in Nashville, where Trump and Senator Cynthia Lummis (R-Wyo) introduced their plans for Bitcoin adoption.

Trump advocates for retaining the government's existing Bitcoin holdings—approximately 198,000 bitcoins, valued at around $19 billion, currently seized from criminals. By halting the sale of these assets, Trump envisions creating a substantial stockpile that could enhance U.S. financial leverage.

In contrast, Lummis's proposal is more ambitious, suggesting that the U.S. Treasury should purchase one million bitcoins and commit to holding them for 20 years, except to reduce federal debt. She argues that this strategic move would not only solidify the U.S.'s position in the global cryptocurrency market but also strengthen the financial backing of the U.S. dollar.


Both proposals underscore a growing recognition of Bitcoin as a significant asset class, reflecting a shift in attitudes toward cryptocurrencies and their potential role in national economic strategies. As these ideas gain traction, the implications for the future of digital currencies in the U.S. are becoming increasingly significant.
 


Emerging Bitcoin Proposals: Trump's Retention Strategy


Two significant proposals for committing the U.S. to Bitcoin emerged simultaneously in July during the Bitcoin 2024 conference in Nashville.

The first proposal is from Trump, while the second, a more ambitious plan, comes from Senator Cynthia Lummis (R-Wyo). Both argue that holding Bitcoin would provide the U.S. with control over a crucial global asset. Lummis even suggests that it could help reduce the national debt.

Trump's approach involves retaining the Bitcoin that the government already possesses—currently 198,000 bitcoins valued at approximately $19 billion, which have been seized from criminals and are held by the U.S. Marshals Service. Typically, these bitcoins are sold to compensate crime victims and fund law enforcement, but Trump proposes halting these sales, effectively providing a $19 billion stockpile.

Lummis's proposal goes further by advocating for the U.S. Treasury to purchase one million bitcoins, with a commitment to not sell any for 20 years unless to reduce federal debt. She believes this move would complement the U.S.'s existing reserve assets, like gold, enhancing financial resilience and reinforcing the U.S. dollar.
 


Current Context


The U.S. already holds a significant amount of gold, with the Treasury managing 8,134 tons, which no longer serves a formal purpose since the end of the gold standard.
Lummis's plan to buy a million bitcoins, valued at around $100 billion at current prices, relies on an accounting adjustment of the gold reserve. The U.S. has undervalued its gold since 1973, maintaining a certificate value of $42 per ounce, which is significantly lower than its actual market price. By raising this valuation, Lummis argues that the Treasury could access funds from the Federal Reserve sufficient to purchase all the bitcoins.
 


Opposition Views


However, economist George Selgin from the Cato Institute is skeptical. He views both proposals as indirect benefits to current Bitcoin investors and doubts that holding Bitcoin would maintain dollar dominance. He criticizes Lummis's financing model as potentially detrimental to taxpayers, suggesting that the perceived gains are misleading.
Selgin also questions the debt reduction argument, asserting that the government is unlikely to sell any acquired bitcoins, similar to its inaction regarding gold sales to alleviate debt. He predicts that Bitcoin investors would resist any future federal sales as fiercely as gold investors do now.
 


Growing Interest


Despite the skepticism, the broader idea is gaining momentum. States like Texas, Ohio, and Pennsylvania have introduced legislation for state reserves, and similar discussions are emerging in Oklahoma. Additionally, countries such as Bhutan and El Salvador already hold Bitcoin, while larger nations like Russia, Brazil, Japan, and Switzerland are considering it in their legislatures, influenced by Trump's advocacy.
 


Conclusion


Bitcoin, akin to gold, is increasingly recognized as a store of value, a sentiment echoed by Federal Reserve Chair Jerome Powell. While Powell may see Bitcoin as unfit for the Fed's balance sheet, the support from Trump, growing acceptance in Washington, and rising Bitcoin prices are likely to keep the notion of a strategic reserve in public discourse.
 



When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. 

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 
 


Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.

Frances Wang
Written by
Frances Wang
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Table of Contents
  • 1. Trump's Push for U.S. Bitcoin Commitment
  • 2. Emerging Bitcoin Proposals: Trump's Retention Strategy
  • 3. Current Context
  • 4. Opposition Views
  • 5. Growing Interest
  • 6. Conclusion

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