On March 6, local time in the United States, after US President Trump signed an executive order to formally establish a US strategic Bitcoin reserve, White House Crypto Affairs Supervisor David Sachs further elaborated on the reserve details on the social media platform X: The federal government will allocate all of the approximately 200,000 Bitcoins it holds to this strategic reserve, and these assets are all from criminal or civil forfeiture proceedings, with the explicit statement that "they will neither be sold externally nor will new coins be accumulated through the market".

The collapse of the Bretton Woods system, the cracks in the petrodollar, and the rise of Bitcoin are essentially the adaptive evolution of the US dollar's anchor over time. The establishment of the Bretton Woods system in 1944 marked the US dollar becoming the "ultimate anchor" of the global monetary system by pegging to gold ($35 per ounce). The core logic of this design was that the physical scarcity of gold provided credit endorsement for the US dollar, while the network effect of the US dollar amplified the liquidity of gold. However, the outbreak of the Triffin dilemma revealed the fatal flaw of the system - global trade expansion requires the outflow of the US dollar (US trade deficit), while the maintenance of US dollar credit depends on the US trade surplus and sufficient gold reserves. In 1971, Nixon announced the decoupling of the US dollar from gold, and the US broke free from the shackles of gold in order to maintain hegemony. It has been proven that any monetary system rigidly tied to physical resources will eventually collapse due to the irreconcilability between resource scarcity and economic expansion. The demise of the gold-backed US dollar forced the US to seek a more flexible carrier. The first oil crisis in 1973 gave Nixon the answer. The importance of oil to modern industry is self-evident. A year later, at the instruction of Nixon, the new US Treasury Secretary William Simon and his deputy Gerry Parsky rushed to Saudi Arabia, the world's largest oil producer, and signed the "Unshakable Agreement" to break the deadlock after the collapse of the gold standard: the US promised to provide comprehensive military protection and security guarantees for Saudi Arabia, and Saudi Arabia agreed to price all oil exports in US dollars and direct the surplus oil revenue to purchase US Treasuries, exchanging military protection for Saudi and other oil-producing countries' acceptance of the petrodollar as the sole pricing currency for oil transactions. Thus, the world entered the 2.0 era - oil replaced gold as the new anchor of US dollar credit, and the petrodollar system formed a closed-loop operation through the "oil trade - dollar reflux - US debt purchase". Wall Street then packaged these petrodollars into derivatives (reaching a scale of $610 trillion in 2023), diluting credit risk through "debt monetization". The essence of this circular logic is that the US collects a "seigniorage" from the world through oil trade, but the US fiscal deficit is now extremely high (accounting for 7% of GDP), and the total debt has exceeded $36 trillion this year, the entire system has evolved into a Ponzi scheme of borrowing new to pay off the old. As the de-dollarization of oil trade gradually expands, this cycle will begin to collapse from the lack of an anchor. Then what's next? Who will fill the next fifty years after oil? Trump currently holds two swords, Nvidia and Bitcoin. In the once high-profile narrative of AI, Nvidia almost played the role of the "digital Middle East", where everyone needs computing power, but the computing power can only be produced by me. However, it is regrettable that a certain East Asian country has embarked on a path of small but beautiful in terms of AI computing power demand, so at least before the complete arrival of the AI Agent era, computing power and digital oil cannot be completely equated. (Or some countries' oil can be self-sufficient) Let's look at another sword, Bitcoin. The idea of using Bitcoin as a strategic reserve originated from a bill submitted to Congress last year by Senator Lummis, the supporting logic being that the purchasing power of the US dollar has been declining in recent years, while Bitcoin's average annual growth rate has reached 55%, and its excellent anti-inflation properties can be seen as a new type of value storage tool to replace gold. And Trump himself has said: "Give them a little tiny cryptocurrency check. Give them a little Bitcoin, and then we'll wipe out our $35 trillion." Whether it is anchoring the US dollar or repaying US debt, I have always been opposed to these ideas in my previous articles. The first point has already been mentioned in the text, the collapse of the Bretton Woods system, and Bitcoin as a digital currency with a cap of 21 million, its scarcity is even far higher than gold, the US cannot repeat the Triffin dilemma. Secondly, the volatility is too large and the reserves are insufficient. Based on the US's current reserve of 200,000 Bitcoins, the asset value is less than $20 billion, accounting for only 0.056% of the US debt scale. To achieve effective anchoring, it would require holding at least 30% of the circulating supply (about 6 million coins), or raising the value of Bitcoin by dozens of times and maintaining long-term price stability, but obviously both are not very realistic. Thirdly, pegging the US dollar to Bitcoin will clearly exacerbate the marginalization of the US dollar. How to convert Bitcoin into a global tax base is also a question. From the current implementation of the strategic reserve, the Trump administration clearly cannot find a better entry point in the short term. But the speed at which this card is played forces me to rethink, do they have an even bigger trump card? Based on my personal thoughts, extending the speculation in the previous article: 1. The scarcity of Bitcoin does not mean that all cryptocurrencies are scarce, most public chain tokens have deflationary mechanisms. The current US dollar is based on oil, with gold as the surface. The composition of the digital Fort Knox can be a mix of BTC as gold, ETH or SOL as oil. Then as the large-scale adoption of the "Crypto City" progresses, can a crypto-style closed loop be formed? For example, projects like Usual and Tether can still promote the so-called US dollar settlement, while their composition mechanism or profit source is closely related to US debt, is this similar to the petrodollar system in some way? 2. Holding and not buying or selling is reasonable at the current stage, but if the killer move is limited to this, then this news should not have been announced so early. Trump is not a fool, and the crypto team behind him is even less so. There are currently rumors circulating in the industry that the US sovereign wealth fund (which is still in the planning stage) will purchase cryptocurrencies, and I actually agree that this sovereign wealth fund is his trump card. 3. I used to think small, that Trump was just issuing some empty checks to the crypto circle for the interests behind him. But from the current situation, we may have to think bigger. The mainstream countries' follow-up on strategic reserves is just a matter of time, and I personally think BTC is the most acceptable, while the status of SOL or even XRP may be higher than ETH (with the advancement of adoption).

4. The largest unit of the crypto struggle is no longer the public chain. Trump has recently shown a clear intention to consolidate the largest CEX, public chain, and various major projects, but how to consolidate them is still a question, and how will the resisters fight?

5. It is widely rumored on Wall Street that Trump is engineering a man-made recession to force the Federal Reserve to cut interest rates. Whenever the market is about to improve, it will be met with a blow from Trump and Musk (the government efficiency department). So does Trump also intend to suppress the crypto market? Will he turn the top expectations into bubbles first?

But I personally don't fully agree with this point. First, the AI bubble in the US stock market does exist, and although it cannot be compared to the Internet bubble of 2000, the overheating is certain. Secondly, the combination of Trump and Musk is too heavy-handed, which will naturally provoke widespread resentment, and the counterattack from the left is inevitable. The so-called recession is actually a joint effort.

As for 1, 3, and 5, I can only speculate at this point, but for 2 and 4, I think I can expand a little further.

II. Sovereign Wealth Fund

On February 3 this year, Trump signed an executive order directing the establishment of a US sovereign wealth fund within the next year. It requires the Department of Commerce and the Treasury Department to submit a plan for the establishment within 90 days, including the funding mechanism, investment strategy, fund structure, and governance model. The fund's goals include funding infrastructure, supply chains, and strategic industries.

There are about 50 countries and regions with sovereign wealth funds globally, such as China's CIC and SAFE, which are ranked second and third in the world's sovereign wealth funds. Depending on the situation of different countries, the investment styles of sovereign wealth funds also vary. For example, the Middle East focuses on strategic industries, Norway focuses on stock investments, and China serves private equity, real estate, and the Belt and Road Initiative.

The main benefits for a country to establish a sovereign wealth fund are four-fold:

1. Smoothing economic fluctuations (hedging resource price risks, optimizing foreign exchange reserve management);

2. Driving economic structural transformation (e.g., supporting the tourism and technology industries in Middle Eastern countries);

3. Global financial discourse power;

4. Protecting society and building social welfare.

The background for the establishment of the US sovereign wealth fund this time is mainly due to the Tiktok dispute. Publicly, it is Trump wanting to buy the Internet company that Americans love the most for the American people, and it can also alleviate the fiscal deficit and infrastructure upgrades. Privately, it is Trump's power upgrade, where he can leverage his business acumen while in the White House to do business for the country. If the situation allows, this fund will naturally become the main source of funding for the crypto strategic reserve.

This situation is not entirely my speculation. The main coordinator of the fund, the nominated Commerce Secretary Lutnik, was the CEO of Cantor Fitzgerald, which is one of Tether's custodians and has been responsible for related asset reserves. In addition, Lutnik is also a supporter of Bitcoin, so it is not surprising that he is responsible for planning the sovereign wealth fund, which paves the way for Trump's crypto family and the network of interests behind him.

Moreover, most sovereign wealth funds are currently registered in offshore financial centers such as the Cayman Islands and Luxembourg, taking advantage of the exemption from investment information disclosure under local laws to engage in opaque operations. For example, the Saudi Public Investment Fund (PIF) holds 320,000 bitcoins through offshore shell companies, with its operations completely off the sovereign asset and liability sheet. Trump's regret in his 16-year term may be fully compensated in this term.

As for the source of funds, there are only four possibilities: earn, sell, borrow, and print. Based on the current situation in the US, the first two are the most likely. Trump hopes to fill the fund through tariff revenue, and another way is to monetize the $5.7 trillion in assets currently held by the federal government. Of course, it doesn't matter which method is ultimately used to establish the fund, we just have a glimpse of the ideal fund size.

If this comes true, the three core points are:

1. Government buying will become a fact;

2. US crypto projects will be the main, if not the only, Alpha in the future crypto circle;

3. Whether top projects accept sovereign investment will be a matter of life and death.

III. Surrender?

Binance has made two big moves this month. One is to partner with the UAE royal family, receiving an investment of up to $2 billion from the sovereign wealth fund MGX, and it is rumored that the US side has also negotiated investment with Binance, with the Wall Street Journal even directly stating that CZ may have exchanged equity for pardon from the Trump family.

The other is that BSC is seamlessly embedded in its own CEX, meaning CEX users can participate in BSC's on-chain transactions using stablecoins seamlessly. These two actions reflect the problems that traditional finance and geopolitical forces have already systematically co-opted crypto, and that embracing centralization seems to be the only way out for public chains. Crypto is being divided up by various countries, and public chains either choose to embrace the nobility or have to be embedded in CEX through the distribution of traffic valves in order to grow stronger.

Ethereum, which chooses none of the above, still maintains its own proud attitude, and its exchange rate with BTC is also constantly creating new lows, with the crypto circle almost maintaining criticism of the Ethereum Foundation and Vitalik for a full year. But from my personal perspective, the survival and counterattack of Ethereum is crucial for crypto. Today, there are only two paths: submission or resistance.

Those who submit can share the glory with the nobility and enjoy temporary peace. But today they give up five cities, tomorrow ten cities, and what kind of Web3 can a Web3 that is constantly transfusing centralization be? One day, the seven kingdoms will be unified under Qin. Although Ethereum has a strange dictator, it is the only public chain worthy of the term decentralized ecosystem. Yes, even today. I am not a staunch supporter of Ethereum, but I also don't want it to become the Handan City of crypto. Value should be pulsing in the code on the blockchain, not in a line of signature on a White House executive order.

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