Editor | Wu Blockchain
On the evening of March 2, Trump suddenly posted on his official social media platform that after years of corrupt attacks by the Biden administration, the US cryptocurrency reserve will enhance the status of this critical industry, which is why my "Digital Asset Executive Order" instructs the presidential working group to advance a cryptocurrency strategic reserve including XRP, SOL and ADA. I will ensure that the US becomes the world capital of cryptocurrency. We are making America great again!
Trump then posted again that BTC, ETH and other valuable cryptocurrencies will be the core of the reserve. He is also bullish on Bitcoin and Ethereum.
A small side note is that according to monitoring by ai_9684xtpa, the Hyperliquid whale who previously long BTC and ETH with 50x leverage has almost cleared their position (only 30.92 left), making a profit of $6.83 million in 24 hours and has withdrawn the $12.85 million USDC including principal and profit back to the Arbitrum network, which has been questioned for insider trading. However, Coinbase executive Conor said that after tracking the address, they found that the funds came from phishing, and the person was a high-stakes player of Roobet. He cleared his long position before Trump's second announcement, missing out on tens of millions of dollars in profits. In fact, he was just a gambler using stolen funds, not someone with inside information.
Mint Ventures research partner Alex Xu analyzed that SOL, XRP, and ADA have been frequenting Mar-a-Lago since Trump took office, and have also provided a lot of open sponsorship, such as donations to the inauguration fund, and there are likely many more covert benefit transfers. Trump is now returning the favor, giving them an "advertising slot" within the president's authority. However, in the long run, projects like ADA and XRP can be used as reserve assets to promote, but this absurd practice will only weaken the seriousness of the BTC strategic reserve itself, further reducing the possibility of the BTC reserve bill being passed at the federal level. Pushing the working group to advance the work is one thing, but succeeding at the legislative level is another. The Republican advantage in the House of Representatives is very weak, and they have no chance of getting SOL, ADA, and XRP through legislation to enter the national reserve. The only possibility is for Trump to establish a sovereign wealth fund directly managed by the Treasury Department through the executive branch, so that he can directly purchase the above assets without going through federal legislation. But how likely is that? How much benefit does SOL, XRP and ADA have to transfer to the Trump family for the president to explicitly order the use of taxpayer money to buy these things? Trump's style is to like to make big news with small moves, and he won't put in a lot of effort and break through major obstacles for things that don't have a big payoff and are high risk.
Cobo founder Shenyu said that in a relatively good market development situation, it may become clearer and pass the national-level reserve matters in the US in the second half of this year, around June to October, and the entire industry or market may then see a significant influx of new capital. But now, in the short to medium term, we may not be able to solve the problems at the application level. There doesn't seem to be a crazy influx of capital at the on-chain or off-chain level either. So I'm looking more to the second half of the year. The final outcome may depend on whether the US national reserve-related matters can have some results this year. If there are no results, the market may end. At this moment, I think the probability of it passing is still relatively high, but it's hard to say for sure, so I'm looking more to the second half of the year.
Earlier, Alex Xu published an article analyzing the US national cryptocurrency reserve, pointing out that the Bitcoin reserve bill is currently advancing at two levels: the state-level Bitcoin reserve bills, and the federal-level Bitcoin reserve bill. About 25 state governments have already proposed Bitcoin reserve bills, reaching about half of the total number of states, while the federal-level reserve bill was already prepared last year and is now in the preparatory hearing stage.
Through the Bitcoin reserve bill, BTC entering the asset reserve list of a major country is one of the main bullish narratives for BTC in this market cycle. This will not only bring in purchase funds from the US government, but will also have a demonstrative effect on the reserve decisions of other countries.
For example, the Czech central bank governor has previously stated that they are considering including BTC in the national reserve; last year, Japanese Prime Minister Shigeru Ishiba also responded to a senator who suggested that Japan evaluate Bitcoin as a national reserve, saying that they are not currently considering reserving Bitcoin, one of the reasons being that "the US is also only in the discussion stage of Bitcoin reserves". If there is a breakthrough in the US Bitcoin reserve bill, it will undoubtedly affect the potential decisions of other countries, investment institutions, and sovereign wealth funds.
So, how is the progress of the Bitcoin reserve bill in the US? Looking at the current situation, I am not optimistic. At the state level, among the states that have proposed Bitcoin reserve bills, 4 states have had their reserve bills rejected or denied: Montana, North Dakota, South Dakota and Ohio. In addition, Pennsylvania state representative Mike Cabell, who proposed a Bitcoin reserve bill last November, lost his seat in the election shortly after proposing the bill, meaning the state's Bitcoin bill will not progress (unless someone else reintroduces it).
What's more noteworthy is that the 4 states (Montana, North Dakota, South Dakota and Ohio) where the reserve bills were rejected are all solid Republican-controlled red states. Ohio in particular is the home state of Cynthia Lummis, the current federal Bitcoin reserve bill's main proponent, and the state has been very friendly to the crypto industry (including mining, crypto payments, staking, stablecoins). Specifically, the roadblocks for the Bitcoin reserve bills in these 4 states have not been the same. Normally, for a Bitcoin reserve bill to be formally passed, in addition to the preparatory stage, it needs to go through 3 steps: 1. Small-scale review and voting by the House committee, followed by a full House vote (some states have the Senate vote first); 2. Small-scale review and voting by the Senate committee, followed by a full Senate vote; 3. Signing by the executive (governor or president) to take effect.
Montana and North Dakota made it to the House voting stage, where they were rejected; while Ohio and South Dakota were rejected at the committee stage, without even entering the formal parliamentary voting stage. As for the reasons for the rejections, I think the attitude of Patrick Fleming, the chief investment officer of the Ohio state treasury department and a member of the committee, is representative. He is himself a cryptocurrency supporter, and his explanation for voting against it in the committee was: "Bitcoin has been one of the best investments over the past 10 years. It's been a real leap. But when you look at its volatility, like the 77% drop in 2021, those are things we don't want to see in our investment portfolio." In other words, as a personal investor, Patrick Fleming believes in Bitcoin, but as the state government's investment officer, BTC's excessive volatility is still not suitable as an investment asset for the state's finances.
It is foreseeable that if the Bitcoin reserve bill is difficult to pass even in the highly crypto-friendly Republican-controlled states, it will be even more difficult to pass a national Bitcoin reserve bill at the federal government level where the power is more balanced and the game is more complex. And if the Bitcoin reserve bills are widely rejected at the state level, the decisions of state legislators will inevitably also affect the thinking of federal legislators, causing some originally supportive federal senators and representatives to waver.
It can only be said that the progress of Bitcoin entering the reserve of major countries is far less smooth than many in the crypto industry had expected. A while ago, the well-known crypto investment firm VanEck predicted that after the Bitcoin reserve bills are passed in more than 20 states, it will bring over $20 billion in buying power for BTC. Currently, this prediction seems a bit optimistic, not only because of the question of whether these states will actually start buying quickly after passing the bills, but also because it is still unknown how many states will ultimately be able to pass the bills.
However, although the Bitcoin reserve bill has stalled in 4 states + Pennsylvania, some states' bills are progressing well. For example, Utah (which is currently the fastest progressing state), not only has the bill passed the vote of the specialized committee, but it has also passed the vote of the House of Representatives and the review of the Senate committee. In addition, the reserve proposals in Arizona and Oklahoma have also passed the vote of the specialized committee of the House of Representatives and are about to enter the full House vote, and the vote in Oklahoma is expected to see results soon. If the bills in Utah, Oklahoma, and Arizona continue to progress smoothly and even succeed in legislation, it will undoubtedly boost the confidence of other legislators, including US federal and other countries' legislators.
