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Creating a national Bitcoin (BTC) strategic reserve might lead to adverse market effects for BTC and the US dollar, as stated by Haider Rafique, global managing partner for government and investor relations at the cryptocurrency exchange OKX.
Rafique mentioned to Cointelegraph that any administration holding substantial amounts of the BTC supply could influence prices by flooding the market with its assets, thus undermining the fundamental idea of BTC as impartial, decentralized currency.
He inquired: “What if, in a few years, a new government determines this was a poor decision?” Rafique further remarked:
“Despite recent bipartisan backing for cryptocurrency, it’s crucial to remember that governmental policies can shift rapidly. As situations evolve over time, a significant aggregation of BTC on a nation’s balance sheet could pose a liquidation risk.”
The German government exemplified this in 2024 when it disposed of 50,000 BTC, which kept prices below the $60,000 threshold, Rafique stated.
The Bitcoin strategic reserve remains a primary concern for many Bitcoin proponents, who argue that establishing a national-level BTC treasury is the forthcoming step toward transforming Bitcoin into the global reserve currency and the standard unit of monetary account.
Related: US legislators engage Saylor, Lee to promote Bitcoin reserve legislation
Hazards to the US dollar and additional financial markets
Creating a Bitcoin strategic reserve could generate a contagion that extends beyond crypto markets, carrying extensive macroeconomic ramifications, Rafique explained to Cointelegraph.
“The most substantial macroeconomic consequence would be a deterioration of trust in the dollar,” he asserted.
Establishing a Bitcoin reserve indicates that the US dollar, which supports the global economy, is faltering and cannot maintain its value based solely on economic strength, he noted.
This could create tremors throughout the entire financial landscape as investors abandon the US dollar for safe-haven assets such as gold or the Swiss franc, Rafique remarked.
Investors would also liquidate risk-associated assets, sparking a chain reaction of liquidations throughout financial markets that would probably culminate in a notable crash, as markets adjust to the dramatic transition in global finance, he concluded.
Magazine: US faces risk of being ‘front run’ on Bitcoin reserve by other nations: Samson Mow
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