US selling 69K seized bitcoins could mess with Trump plans for crypto reserve
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The power of the dollar lies in it being the global reserve currency. Everything traded on a global scale is traded in dollar. Goods on international spot markets, crude oil etc.
It's also defacto currency in a lot of countries (e.g. Maledives from what I learned this year)
Also keep in mind that the US has a huge trade balance deficit. Almost a trillion (-951 billion) in 2022 and -773 billion in 2023. In theory a weak dollar could improve that by making imported goods more expensive. This assumes though that all of the volume of imported goods could be offset by domestic production in the first place. This seems unlikely short term.
A weak dollar or a volatile dollar threatens the status as a global reserve currency and it would make imports much more expensive for pretty much anything that the US can't produce domestically. The devaluation of the dollar could therefore kick of a downward spiral where its weakness affects its value as a global reserve and impacts trade with the US which makes the dollar even weaker affecting its role and importance even more and so on.
You also throw away a lot of soft power unnecessarily.
Much of the economic and political dominance of the US is directly coupled to the US dollar and its "stability" backed by one of the top 2 biggest economies of the world.
Only a moron like Trump would want to threaten that.
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WTAF, random crypto-bro company buys the estate of "some guy" and says that gives them rights to some other guy's seized bitcoin, which doesn't even belong the actual guy anymore anyway. Did they hope to come before a maga-crony judge who could be bought off?
Also as far as the sale, I hope it happens and fast:
1) Drive down price of the crimecoin
2) Kick sand in the orange antichrist's face
3) Add a nice little kick in revenue
4) Help ensure US doesn't get into the business of holding crypto
As far as "bitcoin reserve", also WTAF. It's neither strategic nor of any inherent value nor backed by anything else. What possible actual purpose would this serve other than helping maga-friendly crypto-bros' holdings gain speculative value?
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A reserve should ideally be something that has real or perceived "stability" of value. In case of dollar the stability comes from the notion that the US will continue to be one of the top 5 economies of the world and that the likelihood of the US to default on it's liabilites. A bet that has continued to pay off for almost the entire existence of the US.
Scarcity of a good makes it inherently less stable and less suited as a reserve.
The fact that the federal reserve can control and adjust the money supply is an advantage to increase stability of the dollar as reserve.
They'd lose this with bitcoin and
Scarcity of a good makes it inherently less stable and less suited as a reserve.
The fact that the federal reserve can control and adjust the money supply is an advantage to increase stability of the dollar as reserve.
They'd lose this with bitcoin and
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Driving down the US dollar would help tick a lot of Trump's boxes: as mentioned earlier, it would make exports cheaper and imports more expensive, but, more importantly, it would decrease US debt in real terms.
The US being the only country borrowing in its own currency would decrease the debt by ninenty percent if Trump manages to bring the dollar down that much. Having previously exchanged a large amount into BTC, he could then buy back the discount dollars while BTC starts to dive. Maybe that's the plan.
Only problem would be that he would have to buy something like 5 to 10% of the 33 trillion US debt in BTC to really pull it off, which would drive BTC into the stratosphere, at least for a while.
Edit: this would be bad for poor people, and - in Trump logic - conversely, good for rich people. No downsides here.
The US being the only country borrowing in its own currency would decrease the debt by ninenty percent if Trump manages to bring the dollar down that much. Having previously exchanged a large amount into BTC, he could then buy back the discount dollars while BTC starts to dive. Maybe that's the plan.
Only problem would be that he would have to buy something like 5 to 10% of the 33 trillion US debt in BTC to really pull it off, which would drive BTC into the stratosphere, at least for a while.
Edit: this would be bad for poor people, and - in Trump logic - conversely, good for rich people. No downsides here.
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"Everything" might be a form of tender but fiat means by decree. All currencies are socially constructed forms of exchange, but not all forms of exchange are fiat currency.
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The whole world is holding US treasury bonds because the US has never defaulted on its debt. Tanking your own currency to get out of that "debt" (which is not really debt) would cause the whole T-Bill market to collapse and would mean that the US will both no longer be able to finance its spending on the global market and would probably end the dollar's role as reserve currency.
Killing your options to issue government bonds while you're still fielding a huge budget deficit while at the same time ending your hegemony power seems like a colossally bad idea to me.
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If they flood the exchanges and try to sell them all at the same time? No, it's not going to be $6.4 billion, it could be a third of that, because that's going to tank the price of bitcoin.
And before you say bitcoin is worthless and this could only happen to it, the same thing would happen to stocks.
It also means that the value of a person or a company in terms of its stock is an inflated number that doesn't mean much other than what traders feel about that company's performance.
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Trump does not need to prove he is the Greater Fool crypto bros covet. It ain't 4D chess.
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No downside to that.
Excellent point, it exactly illustrates what is wrong with Tesla's current stock price. It would also lead to the absolutely shocking and unthinkable state where a company's worth is directly related to its market performance (i.e. by goods produced or services rendered).
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You are of course correct. For the purposes of crypto the insistence of crypto fans to distinguish "fiat" from "non-fiat" and assign the latter more value is a distinction without difference though at least in my opinion.
Because they are talking about "value" and that bitcoin as a tender is necessarily "better" than the US dollar (because something something fiat) which makes no sense because while there is a technical difference between both the way value is assigned to either form of tender is the same.
Which you can very easily see by the fact that bitcoin is traded in US dollar.
Also after WW2 or the hyperinflation during the 1920 it didn't matter if you held fiat currency or gold or jewellery in the same way it didn't matter that you held tulips in 1637 Netherlands.
People gave farmers in Germany millions in gold or jewellery to trade it for a week's worth of groceries and the barter economy ran on cigarettes, alcohol or nylon pantyhose instead of gold.
Also controlling the monetary supply when you use your own form of exchange as reserve and all of your debt is in your own currency is an advantage.
I should have phrased my post differently but for the purposes of the discussion about US dollar vs. bitcoin it really doesn't matter that one is fiat and the other isn't because the debate is always about either being used as currency and legal tender and the debate is about "value" in some form of equivalent monetary number and not how the attributes of each make it more/less suitable for something
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Spoilered for brevity.
Shady grifter sales pitch is shady grifter sales pitch is as far as the analysis needs to go.
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Theoretically, a company is worth the value of what it can produce in the future (plus liquidation), but we seem to be in a world where people value them more by what they did last month.
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They destroy guns don't they?
Or do they just sell them back to gun show folks to re-sell back to criminals?
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True, I admit it was a conscious oversimplification on my part; there's always the element of expected future revenue. However, I think that nowadays the valuation is based on a) the unrealistic expectation of constant growth and b) the equally unrealistic and unconstrained visions of CEOs (hence why I omitted it in my first post - there's a growing disparity between those visions and a realistic future production).
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No disagreement from me there, it would be a terrible idea. But I'm not sure Trump ever thinks this far ahead.
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Drop in the bucket for the billionaire class, they'll scoop it up to continue their influence grift with Drumph.
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Statistical
Ars Legatus Legionis
The thing is, Trump can't do it. On his own, Trump can declare the Bitcoins the US government already owns "the Bitcoin reserve". He may be able to change DOJ processes to delay/halt sale of any future confiscated Bitcoins. That later part might be quasi illegal but nuanced enough he gets away with it. So he can do "something" and then in very Trumpian fashion declare victory.
As for buying Bitcoins, as in tens of billions of dollars a year worth of Bitcoins for decades? That requires Congress, and so far Congress has shown no interest. Yes there is one senator who fleeces crypto bros for campaign donations every year doing nothing but saying "we were so close". I would point out her last bill has 0 cosponsors, was assigned to a comitee and had no further action.
Unlike deporting illegal immigrants or ending "the woke agenda" this isn't even universally popular among MAGAs. In fact not even on their radar. It isn't clear why Congress would go along with this.
So here is my prediction for the whole 2 satoshis (0.00000002 BTC) it is worth:
1) Trump will do something completely meaningless like above and take credit to a bunch of fanfare.
2) Congress will refuse to authorize funds for buying any Bitcoins. It won't be a fiery showdown on the Senate. Like most stupid bills it will just be introduced, no action taken, and die in silence. The same fate as the Bitcoin Reserve Bill of 2023 & 2024.
3) There will be endless overly hyped headlines about "the bitcoin reserve is happening". The articles will be scant on details and fail to mention the Bitcoins in the Bitcoin reserve were already owned by the US government.
4) The dumbest of cryptobros will annoy everyone that "we were right. End of the dollar. It is happening! Have Fun Being Poor".
5) The price may even spike temporarily.
6) Eventually, either late 2025 or early 2026 the cyclical Bitcoin bear market will emerge. The price will be substantially lower than the current price. Browsing bitcoin reddit will show endless despair and doom. The dumbest of cryptobros will feel jaded and cheated by Trump, who will have forgotten they even exist.
7) By 2027 the price will start to climb again and most crptobros who were 100% convinced the reserve was going to happen will pretend they never believed it would happen anyways and plus Bitcoin doesn't need a nation to create a reserve.
Check back in a year or two and flame me if I am wrong.
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Statistical
Ars Legatus Legionis
They will sell them all at once, but every prior Bitcoin sale has been at auction. Same process the US government uses for most seized assets.
For those that are curious, here is the public notice and instructors for a seized Bitcoin auction back in 2020.
https://www.usmarshals.gov/what-we-do/asset-forfeiture/sale-approximately-404158424932-bitcoin
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Trump is sooooo going to try and claim that as Government property, and he is the President, then he, personally, owns them and is entitled to the money.
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What Bitcoin cryptobros are in trouble and need to be "bailed out"?
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This makes no sense. Everyone monitors those public keys/addresses, not "miners".
It's not miners who will "exit" if anything like that happens, miners are not the ones holding 19 mil BTCs. Everyone else would need to "exit".
Or are you just spewing nonsense to get some meaningless upvotes?
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Yes, during the housing bubble banks got very creative with various kinds of 'derivative' investments that were ultimately meaningless abstraction layers. The problem there was that they were still tethered, if loosely, to the original asset--the real estate. So when the market ran out of greater fools, the whole house of cards collapsed. They even roped in the ultimate bagholder--the US taxpayer--to bail them out. Which would seem to be exactly what is going on here.
One lesson of that time, though, is to be careful betting against it--the market can remain irrational longer than you can remain solvent.
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This came to my mind the first time I've heard this claim from Trump about turning Bitcoin into a federal reserve. All the smoke from 2016 from the meetings Trump and his team had with Russian officials, the general stance Trump had with Russia during his first mandate, and now this?
Trump will go into office, and seems like Russia will have a greencard to take Ukraine's territory.
I'm not from USA, so what the hell do I know, but from my perspective, I'm worried about what seems to be going on - with the intersection of AI ramping up too, the stakes are higher than ever.
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If this were to happen the reverse would also have to be true that you could pay taxes in bitcoin etc.
It won’t happen but if it did, it would just be a dollar by a different name and the price would fluctuate a bit like dollar does.
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thing is, the US owns most of its debt to itself. the social security trust fund is about 10% by itself. Hurting holders of US government debt is mostly hurting US citizens.
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No, actually it's not out of there reach. Bitcoin is easily tracked which means it's not anonymous
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Depends on the meaning.
It's out of reach in the sense that a government can't take sole control of bitcoin and can't change the supply of coins. This is because the inventor was an opponent of "fiat money" and especially how governments allegedly solved their issues by "printing money", at least that's what he believed.
To enable this you need a decentralised system and a decentralised ledger of all transactions, hence the block chain, so that no one can "maliciously" remove coins from cirulation or create new ones out of thin air.
This makes any bitcoin transaction easily traceable which is by design.
It's not really anonymous in a sense that you can trace every bitcoin from wallet to wallet and have a ledger of every trasaction.
Which is how e.g. the IRS can trace the flow of bitcoin and get you for tax evasion.
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Yet again we see both the appeal and fundamental flaw of cryptocurrency, or any deflationary currency. The system is set up to reward people who buy and hold, which keeps the price from collapsing, but it means if you ever spend your currency you are a fool. So the people trapped in the scheme end up hording ever increasing, sometimes ridiculous, amounts of "wealth" that doesn't convert to goods or services. So many crypto millionaires that can't sell because then they would miss out on being crypto billionaires.
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It's so mystifying to me hurting our soft power like this. These moves (crypto reserve, invasion threats, trade wars, etc) all work against the dollar and hurt it as a reserve currency. I just can't understand intentionally doing these things unless we're now on a literal imperialist warpath. Everybody is looking at the possibility of invasion of Greenland and Panama, when the threats alone may cause the developed world to do something like launch a massive trade embargo against the US. Europe has already figured out they can survive without Russia. They might be discussing if they should survive without us as well.
China is not going to sit on this. They're going to be putting in work making calls and visiting leaders to maximize the value they can get out of these antics. "Hey guy, China will happily take on any missing trade if you shut down relations with that out-of-control Elonald Trusk. You can't risk sending them the tools to help destroy you.". We might already be in serious trouble.
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Great points. My "betting against it" is just avoiding it entirely, like I did ABCP.
Timing is for the hedge funds on Wall Street, where many still lose, but some will become famous, like Michael Burry. For everyday folks, avoiding a space that doesn't offer an enticing long-term rationale is best.
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What will be most interesting, and something we won't know unless the market collapses, is how many folks are indeed accessing their crypto wealth by using it as collateral for real money. This is one way the uber wealthy avoid taxes--they borrow against their wealth at interest rates lower than their typical annual return. Thus, they never need to sell and realize any gains. I wouldn't be surprised if this is being done in the crypto space.
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All of them.
Cryptocurrencies are always valued via the greater fool theory and there's no greater fool than the Trump administration spending taxpayer money. Really, what other explanation for a bitcoin reserve would there be other than paying existing bitcoin holders a massive premium for the privilege of buying their bitcoin?
And before you say something about the US adopting a commodity backed currency like Project 2025 wants us to do, if you're going to pick a commodity to back your currency, bitcoin is the last commodity you would pick.
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You are not getting anywhere near enough upvotes for this comment. Violently correct.
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