Original title: The Genie
Author: Arthur Hayes, founder of BitMEX; Translator: Deng Tong, Golden Finance
The Pax Americana Make-A-Wish Corporation, headquartered in Mar-a-Lago, receives many supplicants. Cryptocurrency people are waiting in line like everyone else, hoping to have one or more wishes fulfilled. The capricious genie "The Orange Man" is surrounded by a group of flatterers, presiding over the situation in the South Florida swamps, playing 1980s pop music in his country nightclub every week.
Genies are neither good nor bad, it is the wishes of the recipients that we should judge. Every culture has moral stories about how misguided wishes aimed at shortcuts to success, wealth or personal happiness have unexpected consequences. The moral of this story is that there are no easy buttons in life; all good things are the product of hard work and effort.
I intend to discuss the key wishes of many in the global crypto industry regarding the establishment of a Bitcoin Strategic Reserve (BSR) and crypto regulation under the US. Broadly speaking, many misguided crypto people want the US government to print dollars and buy Bitcoin as part of the national reserve and create regulatory moats for crypto businesses in which they have a financial interest. I believe these people are asking for the wrong thing. Let's do the hard thing and ask the genie for something that the next administration, regardless of political affiliation, cannot easily undo.
In the first part of this article, I will discuss why the BSR and Frankenstein crypto regulation bills are negative for the industry, both locally and globally. Next, I will provide advice for those who line up day after day in their seersucker suits or block heels and summer dresses hoping to make a wish to the orange genie, what they should ask the orange genie to fulfill.
If you can buy it, you can sell it. The fundamental problem with governments hoarding any asset is that they buy and sell assets primarily for political gain, not financial gain. Given the current structure of the global economic system, does Bitcoin itself have any role to play for the U.S. government? No. Bitcoin is just another financial asset. While readers may think that this is the hardest currency ever created by the one true God, Satoshi Nakamoto, I can assure you that this genie is not motivated by a spiritual need to please God. He is motivated by appeasing the voter base that helped him get into office.
Let's assume Trump is able to create a BSR. The government buys a million Bitcoins, as U.S. Senator Lummis suggests. Boom! The price goes crazy. Then, the buying ends and the uptrend channel stops.
Fast forward two to four years. By 2026, the Democrats may be able to win by capitalizing on voter dissatisfaction with Trump's failure to quell inflation, stop any endless wars, solve food supply problems, drain the swamp, etc. What if they get a veto-proof majority in the House? What if, in 2028, the Democrats win the election…
For an incoming Democrat-controlled legislature or president, finding a ton of cash to buy nice things for supporters is the first order of business. It’s the first order of business for any politician, regardless of the political system. There are a million Bitcoins sitting there ready to be sold; all it takes is a signature on a piece of paper. The market rightfully worries about when and how these Bitcoins will be sold. Is this done to minimize market impact and maximize the dollars gained, or is it done maliciously to punish Orange Man crypto holders? We don’t know, but this uncertainty will limit enthusiasm for Bitcoin and the entire crypto capital market.
Creating altcoins of the BSR or national reserves, including cryptocurrencies like Ripple, turns any cryptocurrency held by the government into a powerful political weapon. Furthermore, as a purely political ploy, will the US government meaningfully engage with the community? Will they donate to sponsor Bitcoin Core developers? Will they run nodes? Maybe… but the way the BSR is being talked about, it sounds to me like a set-it-and-forget-it exercise. Trump and the GOP can look at Bitcoin’s sky-high price, declare mission accomplished, and pitch David Bailey for more campaign donations at $10,000 a pop. Don’t hate the players, hate the game. Asking the genie to grant this wish will cause unnecessary pain in less than two years.
The easiest way to understand what crypto regulations holders find acceptable is to look at their portfolios. From my perspective — away from the circus surrounding the genie — it seems that those with large stakes in centralized crypto financial intermediaries are most likely to have their crypto regulatory wishes fulfilled because of the volume of noise they generate. Unfortunately, those building truly decentralized technologies and applications don’t have the financial wherewithal to play politics at this juncture in the cycle. The richest crypto bros all own an exchange, brokerage service, or some sort of lending platform.
Thus, the crypto regulatory wishes that are likely to be granted, if at all, will come in the form of overly complex, prescriptive rules that only large and wealthy centralized companies can afford. That’s because the only people who can interpret the law will be career corporate lawyers who are in and out of various alphabetical regulatory agencies.
Is this what the broader crypto community really wants from the genie? Is this all about making Brian Armstrong and Larry Fink richer? I’m not a hater; they’re just doing their job…maximizing shareholder value by creating a monopoly structure that is uniquely beneficial to their business. Perhaps those readers who are shareholders of Coinbase and Blackrock want a Frankenstein Crypto Act. But I believe that such regulation will not change the status quo, and while it’s not directly negative for crypto, it’s not positive either.
For all the global builders who have relocated to the US because of a supposedly crypto-friendly government, take note. If you acquiesce to such an outcome, your startup is doomed to fail. Monopolies surrounded by an impassable wall of red tape regulation are not friendly to real innovation. They use their uniquely privileged access to the system to drive out would-be usurpers. As a startup founder, you may fly business class to JFK, but you’ll definitely fly economy class when you leave.
What would I wish for? I'll tell you. As is my style, in order to understand my wish, I need to review some financial history and provide my interpretation of certain events.
The big question is, why would the genie grant my wish or something like it? The genie and his lieutenants are the ones who really rule the empire, and they will only grant my wishes and help them achieve their goals.
The overall goal of Trump's two most important lieutenants, US Treasury Secretary Scott Bessant and US Secretary of State Marco Rubio, is to reform the global economic order to maintain the dollar and US hegemony. As I briefly mentioned in my previous article "Arthur Hayes: Why BTC may fall to $70,000 before rising to $250,000", the US dollar system is divided into two parts. That is, currency and reserve assets. The US dollar has been the reserve currency since the Bretton Woods Agreement in 1944, but the reserve assets have changed over time.
The dollar system reserve assets change over time:
During this period, the value of the dollar was fixed at $35 per ounce of gold. Certain sovereign states that were peace allies of the United States were allowed to exchange dollars for gold at the above price.
US President Richard Nixon abandoned the gold standard in order to maintain the continuation of the Vietnam War and the increased social welfare programs enacted by his predecessor, US President Lyndon Johnson. The reserve asset became the petrodollar. Saudi Arabia was the first country to explicitly agree to price oil in dollars and used its dollar surplus to invest in US Treasury bonds. The Treasury could now issue bonds whose bonds were primarily backed by oil flows from the largest marginal hydrocarbon producers.
Throughout the 1980s, the United States was able to increase oil production and make its economy more energy efficient. The rise of China and the other Asian Tigers (South Korea, Taiwan, Japan, Malaysia, Thailand, etc.) meant that the United States and Western Europe could produce goods cheaply. In 1994, China conducted a massive devaluation of the yuan and officially joined the mercantilist race to stockpile as much foreign hard currency as possible through exports. These exporters were allowed to sell goods to the huge Western consumer market as long as they priced their goods in US dollars and used their dollar surplus to buy US Treasuries.
China was the world’s largest economy for much of the ancient period before the European Renaissance; its stated goal was to reclaim glory for the Chinese people. Making America great again is not a uniquely American idea; the Chinese have been doing it since 1949.
To achieve this, China transformed itself from a low-cost, low-quality producer to a low-cost, high-quality producer. As it became clear that using its surplus to buy more and more Treasury bonds further entrenched China’s position as a secondary power to the United States, the Chinese government stopped accumulating Treasury bonds. Under the old unspoken agreement, one dollar of export surplus must be used to buy one dollar of Treasury bonds. In the past 12 months of public data, China has generated a $1 trillion export surplus but allowed its Treasury reserves to fall by $14 billion. [1]
Other exporting countries have taken notice. Although most trade is settled in dollars, most of the fast-growing global South trades more with China than with the United States. De-dollarization is not about abandoning the dollar itself, but about investing the surplus in assets that the elites under the rule of the United States do not approve of.
This brings me to the dilemma facing Trump’s lieutenants. They need to create a new system that retains the dollar as the invoice for trade and invests in a reserve asset that allows them to maintain a functioning US Treasury bond market. If they are really ruthless, they will devise a solution that quickly reduces the US public debt to GDP ratio to around 30%, the level it was in 2000.
The world will no longer accept savings in Treasury bonds. That is why a neutral reserve asset must be chosen. No country has attempted to suggest replacing the dollar with their domestically created fiat currency. This is because Pax Americana is in decline and it is directly related to the imbalances that necessarily arise from the Empire’s role as the issuer of the reserve currency.
That’s financial history, but before I express my wishes, I want to talk about how one of the most influential TradFi money market strategists thinks the problem I described above can be solved.
Zoltan Pozsar is a former Federal Reserve staffer in Dallas, a Credit Suisse strategist, and currently blogger for the financial elite of Pax Americana. His solutions are likely to be implemented, and I will describe them shortly. It is therefore worth discussing them, and then discussing how I diverge from his ideas. Ultimately, I think his solutions apply to the 1980s, not 2025. Too many strategists who believe in American exceptionalism believe that reclaiming the power and prestige of Pax Americana is like the storyline of the movie Top Gun.
The recent Top Gun remake, starring an older but still-alive Tom Cruise, could be an apt metaphor for current world relations with a few minor tweaks. Replace a nearly $75 million F-18 with a $50,000 drone from Iran’s Shahed that is sold in the Global South. Tom Cruise, in his 60s, is still flying these overly expensive aircraft against a swarm of AI-connected drones for a fraction of the price.
This brings me to DeepSeek. In case you only live inside TikTok and don’t know it, DeepSeek is a revolutionary AI Large Language Model (LLM) that performs just as well as ChatGPT or Claude, but costs 95% less to train. It’s open source, and so far no CEO of a major tech giant, like Jensen Huang (NVIDIA) or Satya Nadella (Microsoft), has said that its results and costs are not justified.
DeepSeek is important because it was developed by a Chinese hedge fund in Hangzhou. China is under an economic blockade from the United States when it comes to high-performance semiconductors. Chinese entrepreneurs, in the American way of thinking, should not be able to train and deploy an LLM that performs anywhere near as well as one trained using high-performance chips designed using the United States. The apparent success of DeepSeek shatters the fantasy that “whoever invests the most can create the best-performing LLM.” It’s also further proof that necessity is the mother of all invention. Economic sanctions can’t stop a small team of 200 determined Chinese entrepreneurs. If a ground offensive destroys China’s production capacity, the era of American exceptionalism may be over. There is nothing wrong with being ordinary, unless your entire identity is wrapped up in a fictitious notion of nationality and you have a sense of superiority simply because you were born in "the United States."
When non-American elites believe they are inherently inferior, they will follow orders. This helps the U.S. financial elites set policies such as what currency a country uses in trade and how their national surplus is invested. If non-Americans believe they are equal, they may not give in and take orders from U.S. diplomats. This is important to Zoltan's policy recommendations because they are bilateral measures. Bessant says "do this," and a country's treasury acquiesces. If the country refuses, then nothing happens. This is the Achilles' heel of Zoltan's policy measures.
Zoltan's goal is the same as mine: to devalue U.S. Treasury bonds. In addition, Zoltan correctly points out that the United States must extend the maturity of its debt stock and reduce the amount of interest it pays. Let’s assume that Bessent wants to reduce the debt-to-GDP ratio from 100% to 30%. If GDP remains the same, then the real value of the debt needs to fall by 70%. The general theme of Zoltan’s various ideas is to ask foreign Treasury holders to swap short-term bonds for 100-year bonds. 100-year bonds are not tradable, but can be repurchased at par if the country needs cash. [2]
Let me explain the mechanics:
Suppose that you, a country in the Global South, hold $100 worth of 10-year Treasury bonds, also with a par value of $100.
At Bessent’s request, you swap the 10-year Treasury bond for a zero-coupon 100-year Treasury bond (the 100-year bond). The 100-year bond is worth $30 and has a par value of $100. I’ve used bond math in a clever way to make this example easier to understand. A bond with no coupon income over its entire life and a longer maturity has a lower intrinsic value than a bond with coupons and a shorter maturity.
The real value of your debt has depreciated by 70%, but its par value is still $100.
If you are a good ally (Europe… a little questionable) or a vassal (Philippines… I think Europe belongs here), you can call the Fed and exchange your Century Bond for its par value in dollars for free. Imagine you need dollars to buy some oil from Saudi Arabia, and the real value of the Century Bond is $30, but the Fed will give you $100 today, with no interest.
Any surplus dollars can only be invested in Century Bonds for future transactions. You may not buy anything else.
This is a good and bad deal. The bad thing is that you suffered a 70% real depreciation. You just agreed to destroy your country's savings. Worse, you also agree that the only place to get liquidity for this debt is the issuer itself, not the global market. But on the other hand, if you behave well, you can get an interest-free loan from the Fed.
There are a few points to point out, which, in general, show that this deal is not accepted by many. For many countries, China is now their largest trading partner, not the United States. American weapons cannot be sold because they use them to arm Ukraine. Moreover, American weapons are just intermediate products that China re-exports, so why not go directly to the source?
Can I improve on Zoltan's idea? Of course I can.
The goals remain the same: devalue existing treasuries, keep the dollar as a trading currency, and extend the maturity of treasuries to 100 years. Another new goal is to make Bitcoin a global neutral reserve currency.
It is very important to choose what you devalue your fiat currency against. If you devalue anything that has a real use, like oil or food, you risk social collapse due to inflation. The object of the devaluation must be something else that will not actually impoverish the majority of the populace.
Zoltan chooses the timing of the devaluation. You trade a 10-year bond for a 100-year asset. The time value of money dictates that what you get in 100 years is worth less than in 10 years. But the other party must agree to the exchange. I believe the devaluation should be against Bitcoin, and can be done unilaterally, and will ultimately have the same effect.
My Plan:
Bessant gives a speech announcing the US's intention to reformulate the global reserve currency system, with the US dollar as the denominated currency, but the reserve asset being Bitcoin.
The Treasury will bid Bitcoin at a higher USD price than the current market price, so that over time the total market value of Bitcoin will be large enough to facilitate its role as a global reserve asset. Specifically, if Bitcoin is to become as large as the Treasury bond market, the price of Bitcoin must rise to $1.8 million.
Example:
If BTCUSD = $100,000, Bessent says they will buy BTC for $200,000. The problem is that instead of providing cash USD to the sellers, he provides them with 100-year zero-coupon bonds on-chain (Centennial Bonds). He also allows anyone who provides appropriate information about themselves to buy back the bonds for cash at par, with no interest for one year. In effect, the BTC seller gets USD, but it gets it in the form of a loan. The seller's real asset is the Centennial Bond.
Market Reaction:
Because Bessent buys BTC at a price above the spot price, arbitrage is possible. Traders can borrow USD, buy spot BTC at a price below the Treasury’s bid, sell it to the Treasury in exchange for the Century Bond, buy back the Century Bond for USD, and then repay the loan. Since this is done on-chain, anyone in the world can trade, and BTC will quickly rise to Bessent’s bid.
Criticism:
Why would a BTC holder sell BTC for shitty Century Bonds? Because the price is high. This is also why people think it’s a good idea to give BTC to BlackRock. Most ideals and common sense go out the window if the price is right.
Now the Treasury has BTC on the asset side and Century Bonds on the liability side. The market will expect Bessent to raise its bid again and get ahead of it. Now the Treasury can sell its BTC for a profit in USD. Let’s say the market trades at BTCUSD = $300,000, but Bessent bought BTC for $200,000. This $100,000 profit can be used to buy back the 10-year Treasury. In effect, Bessent can extend the weighted average maturity (WAM) of the Treasury in one step.
Treasury holders will not be disadvantaged because they know that Bessent will use the trading profits to buy non-tradable Treasurys. This is crucial because it preserves the pricing mechanism of TradFi institutions and loan repayment capacity that use Treasurys as collateral.
To further solidify the role of the dollar outside of China, where large US social media platforms (Facebook and X) are banned, Bessent encourages Zuckerberg (Facebook CEO) and Musk (X CEO) to allow USD stablecoin transfers within their apps. Obviously, they should use Ethena's synthetic USDe. Now, the entire world, most importantly the Global South, where Facebook, WhatsApp and Instagram are the main methods of online communication and commerce, will use USD banks. This completely negates any attempt to de-dollarize these countries. And leaders can’t stop it because if they try to take away the digital dopamine of the common people, a revolution will happen overnight. The US can’t even ban Chinese-owned TikTok because young people will burn any politician associated with a ban at the next election.
As surpluses of digital dollars accumulate in the grassroots system, these can be saved in the form of Bitcoin or other cryptocurrencies. If the price of Bitcoin gradually rises, small holders will be tempted to sell Bitcoin back to the Treasury in exchange for a 100-year bond. Now, US debt is no longer held by a few countries, but by the grassroots people around the world. Managing a few cats is difficult, managing billions of cats is impossible. That said, it’s unlikely that debt holders will all flee at the same time. At the end of the day, the Treasury wants its debt holders to be careful.
Whatever World Liberty Financial tells investors they are building; this is what they should do. In case you don’t know, World Liberty Financial (WLF) is a cryptocurrency outfit associated with the Trump family. The goal here is to bring instant change to the US Treasury by leveraging Web3 and WLF to help build the infrastructure. This disintermediates the large “too big to fail” banks, but what have they actually done for the Empire besides causing financial crisis after financial crisis, requiring money printing to bail them out, and ultimately causing monetary inflation that destroyed the soul of the Empire? Just take a stroll through the fiat financial capital of New York under American rule. Nightclubs are brightly lit, but depressing scenes of poverty, homelessness, and crime pervade everyday life.
The Web3 tech stack should be powered by public blockchains. You all know what’s going to happen. It’s always closed! In that spirit, Aptos is the best choice. It’s the fastest (800ms), cheapest ($0.00005 per transaction), and most reliable (99.99% uptime) public blockchain for high-performance financial transactions. And it shows. Aptos is quietly approaching the top three networks with the most institutional assets on-chain, according to RWA.xyz, and has partnerships with the likes of Franklin Templeton, Brevan Howard, and Microsoft. Its MOVE architecture was designed specifically inside Facebook to handle financial transactions for the world’s largest social network.
Maelstrom won’t be given away for free. To be clear, we have a ton of Aptos and Ethena.
The U.S. Treasury needs an on-chain exchange where digital dollars, century bonds, and bitcoin can be traded.
First, the Treasury needs digital dollars.Tether’s USDT and Ethena’s USDe should be recognized as digital dollars. USDT is simply a dollar held in custody in the U.S. banking system. USDe is long crypto plus short perpetual swap, resulting in a synthetic dollar; all assets held in custody on a large crypto exchange.Politics is about the boys’ work, so how do existing governments benefit from choosing between these two solutions? US Secretary of Commerce Howard Lutnick owns equity in Tether. WLF owns millions of dollars worth of Ethena governance tokens, $ENA. If Tether and Ethena are chosen as the digital dollar approved by the US Treasury, both equity and token holders will benefit. Self-interest is what makes human civilization run.
Second, the Treasury needs to tokenize the Century Bonds. The Treasury issues a token (TSY100) representing each bond. TSY100s are available when purchased using wrapped Bitcoin on Aptos (you can already wrap Bitcoin with Wormhole, Celer, and Layerzero). Next, a repo facility where TSY100s can be staked, and USDT or USDe loans created.
Note: Technically, the Treasury cannot create USDT or USDe. So if a staker wants USDT, the Treasury must mint USDT by sending dollars to Tether's bank account. If a staker wants USDe, the Treasury must mint USDT, then mint USDe; all of which can be done using API transactions provided by Tether and Ethena.
Third, the Treasury needs to build a permissioned Web3 money market exchange, which we call EagleSwap. The Treasury already has an authenticated service called ID.me (this is just one example of an online identity verification service). This service can be extended so that any user in the world can sign a message to add the Aptos wallet to the whitelist. When you connect your Aptos wallet to EagleSwap from your desktop or mobile device, you can swap between USDT, USDe, TSY100, and wrapped Bitcoin if you are whitelisted. EagleSwap will quickly become the most liquid place to trade these instruments, as Bessent is taking over the world’s largest fiat currencies, buying and selling Bitcoin, USD, and Treasuries.
The next phase of connectivity is between the US Treasury and the social media platform owned by Broligarch. Facebook and X are two of the leading social media candidates to roll out crypto wallets to their global user bases. By connecting users to EagleSwap in an abstract way, users can now transfer, trade, and store digital dollars, century bonds, and wrapped bitcoins. The most pressing need of the Global South is to trade in dollars outside of their TradFi banking system. The dollar is a shitcoin, but most other fiat currencies have Marburg Ebola. Again, connective tissue should be built with Aptos.
Judging from their prime seat at Trump’s inauguration, the Broligarchs are certainly in power. They need to take the next step and clamp down on the parasitic TradFi banks.
I have discussed unilaterally devaluing the dollar and the technology to implement this policy. Next, I will discuss why the United States could have an unfair advantage in “producing” a neutral reserve asset if it enacts the right legislation.
For the elites who run the United States to accept this solution, the United States must have some unfair advantage in Bitcoin mining. To mine Bitcoin, energy must be expended solving random puzzles. The first question is, does the United States have cheap, abundant energy?
The United States has two things going for it when it comes to energy production. First, there are vast untapped hydrocarbon deposits surrounded by the imaginary curve of humanity called the United States. All that is needed is the money and approval to drill. The best thing about drilling, which will eventually power Bitcoin mining farms, is that it doesn’t matter where the energy is located. Often, energy is located far from the population centers it serves. The transportation of hydrocarbons is sometimes more costly than the marginal cost of drilling. However, if you transport the hydrocarbons to an on-site power plant that simply provides the electricity to mine Bitcoin, then you don’t have to pay for transportation. A lot of remote areas have abundant energy, so instead of building politically fraught pipelines and roads to transport hydrocarbons, these places can simply build local power plants and Bitcoin mines. Alaska is remote, rich in hydrocarbons, and cold for much of the year. It’s the perfect place to build a Bitcoin mine powered by stranded energy.
The second promise of the United States is its commitment to capitalism. I’m not saying this is morally good or bad; it’s just a statement of fact. The United States is a country founded by a bunch of tax-evading slave traders who created a constitution that guaranteed their capital would increase in value over time and allowed their descendants to remain in power economically and politically. What better place to start a multi-year project than drilling for hydrocarbons and mining Bitcoin?
Another benefit is the construction of domestic semiconductor fabs in the United States. Taiwan Semiconductor is nearing completion of several state-of-the-art fabs in Arizona. Other foundries will be strongly encouraged by the government to build fabs in the United States through subsidies and tax breaks. Bitcoin ASIC chips can be produced domestically, so there will never be a shortage if global demand rises significantly with prices.
There is a huge problem: while fiat capital is treated world-class in the United States, Bitcoin and cryptocurrencies are not. What we need is constitutional support for Bitcoin and cryptocurrencies. Bitcoin miners cannot conduct any kind of censorship, but lawmakers may require miners and/or node operators to conduct censorship. Public crypto ledgers need to become a protected form of speech. This makes sense, since public blockchains are digital, immutable chains of speech hosted on decentralized networks powered by miners burning electricity.
If the United States wants to be the best place to mine Bitcoin, it needs to enact a simple bill of less than two hundred words:
"Cryptocurrencies and tokens residing on or powered by a blockchain are forms of protected speech. All applicable laws protecting free speech apply to users or intermediaries of public blockchain technology. Cryptocurrencies and public blockchains are private, and no government agency may compel intermediaries, participants, or node operators of the blockchain itself to collect and generate data about participants and transactions."
With a pro-energy government and the passage of crypto legislation that supports permissionless innovation, the United States would have what it takes to bring the majority of global crypto activity within its borders. Given the massive capital expenditures for energy production and ASIC chip manufacturing, coupled with liquid fiat capital markets and legal protections for peer-to-peer decentralized network operations, the United States would be home to the majority of the Bitcoin network hashrate. The neutral reserve asset would then effectively be produced within the United States.
Finally, overturning such legislation would be extremely difficult. While some politicians have railed against the negative effects of big tech and social media companies, little progress has been made toward repealing Section 230 of the 1996 Communications Act, which grants tech platforms immunity for content and activity hosted and conducted on their networks. The status quo is simply too lucrative. Similar marriages of convenience will form between cryptocurrencies and politicians, and between crypto companies and individuals desperate for high-paying jobs and a boosted tax base.
If Bessant can drive the price of Bitcoin above $1.8 million, it would create the richest person in human history. Some of the largest Bitcoin holders reside in the United States or are U.S. companies. Less than a year after the launch of its Bitcoin ETF, BlackRock holds nearly 600,000 Bitcoins, worth nearly $60 billion. Given that political power in the United States is largely based on wealth, this group would be able to wield enormous political influence. Crypto holders would be loyal supporters for years or decades if the Republicans implement these measures.
Remember, politicians’ goal is to get re-elected. Everyone who agrees with his politics, except Trump, will be re-elected in 2026 or 2028. What better way for a Republican politician to ensure he remains in power than to make American cryptocurrency holders extremely wealthy while further consolidating the dollar's hegemony?
Will other surplus powers accept Bitcoin as a reserve asset to replace Treasury bonds?
Yes.
Assuming that Bitcoin's market capitalization is large enough to support trillions of dollars worth of transactions, it has many advantages over Treasury bonds.
The code of Bitcoin cannot be changed unilaterally by anyone.
Even if some US miners tried to hard fork the blockchain, excluding certain transactions or changing the total amount of Bitcoin mined, it would cause Bitcoin to fall to zero on the new chain, and all their assets would instantly become worthless. The economic game theory behind the Bitcoin blockchain dictates that this will not happen.
Bitcoin can be accessed and traded without permission at any time, anywhere, as long as there is an Internet connection.
Bitcoin is the purest monetary energy derivative imaginable by humans. Therefore, it will retain the energy value of trading surpluses over time.
No country, not even China, wants to become the issuer of the world's reserve currency and have its bond market become the world's reserve asset. The natural result is the requirement for open capital accounts and the adverse effects on most people when you stop producing any real products and just engage in financial engineering. This is certainly not "shared prosperity." So a system that retains dollars for trade, and even bilaterally exchanges for local currencies, but where surplus is held in Bitcoin is a step forward for everyone…except the too-big-to-fail legacy financial institutions that are watching their power and prestige fade away while decentralized finance rises.
Stacking Sats is my game, and I hope yours is too. So if you find yourself sitting at the genie’s table, dressed to impress, make the right wish.
Crypto enthusiasts are some of the smartest people in the world, and some of the most naive, but Trump is providing a crash course in politics.
In less than 60 days, the price of cryptocurrencies went from $70,000 to $110,000 based on every crypto enthusiast’s wish fulfilled about how cryptocurrencies would be regulated under the United States. The first problem with this idea is that in a bilateral exchange of value, you always want to receive the goods first, and then pay for them. Trump and the Republicans got what they wanted from crypto in the first place: enough votes to win the presidency and gain party majorities in the House and Senate. Now it’s time to “pay up” and they are not on the same one-second candle timeline as us degenerate speculators.
I say this because Trump is creating task forces, Senate subcommittees, instead of taking action. When Trump wants to act, he does. The 25% tariff on the largest trading partner of the United States was announced and implemented in a matter of days. The removal of ESG and DEI policies within government agencies came just as quickly. I cite these examples as proof that Trump will not do something positive for crypto, but crypto regulation or a strategic reserve of Bitcoin is not a priority for him or the party. That’s a shame because on the margins, the crypto single-issue voters put them in power.
As the global community quickly realizes that US politics has not changed so dramatically as a result of Trump’s election, crypto prices will fall to Q4 2024 levels. I still call for a retest of $70,000 to $75,000 for Bitcoin.
What could get crypto out of this mess? Some form of money printing by the Fed, US Treasury, Japan, etc., or specific legislation that allows permissionless crypto innovation. The Frankenstein crypto bill would benefit Coinbase, BlackRock, and stonk investors. But for us crypto degenerates, it would not propel the market to new heights. It would not further the goal of decentralization. It would be an insult to God, and the punishment would be swift and severe.
There is hope, and if you are a US crypto holder, get out now and let your elected representatives know that you will not support politics as usual. Email them, write them, or visit their local office. Politicians are very responsive to people who are interested in their policies. If you think a strategic reserve of Bitcoin is necessary, rant now, don’t just like X’s comment. The problem is that our digital devices allow us to rage in our own echo chambers, but rarely encourage us to take concrete actions in the real world that require a little effort. Everything you truly value has a price. There are no easy buttons in crypto politics — open your eyes and be careful of what’s going on below.
[1] See the U.S. Treasury’s monthly TIC database.
[2] A repurchase agreement, or repo, is a loan in which one party exchanges an asset, such as a bond, for cash with another party at a certain interest rate. At maturity, the bond and cash are exchanged back to the original holders.
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JoyFormer Binance CEO Changpeng "CZ" Zhao faced account restrictions on social media platform X (formerly Twitter), post-resignation linked to a $4.3 billion settlement with the U.S. Department of Justice. The platform hinted at rule violations, and CZ attributed the restriction to a flawed bot detection algorithm, raising uncertainties about his future activity despite Richard Teng assuming Binance's leadership role.
JixuRaiffeisen Bank, a venerable Austrian financial institution with $215 billion in assets, is set to introduce cryptocurrency trading services for retail clients in Vienna by January 2024, in partnership with Bitpanda. The move reflects the bank's strategic foray into the crypto realm, targeting digitally savvy customers with a preference for modest investments and emphasizing the increasing adoption of cryptocurrencies in regions with clear regulatory frameworks.
JixuThe Macy's Thanksgiving Day Parade featured the Cool Cats NFT collection, with its Blue Cat Balloon symbolizing the launch of "The Milk Chug" YouTube Shorts series. Despite facing challenges and price fluctuations, the parade spotlight has revitalized the collection, now boasting a floor price of 1.05 ETH ($2,150), marking a 195% surge in trading volumes within the last 24 hours on OpenSea.
JixuThe SEC has filed a complaint against Kraken, alleging the cryptocurrency platform operated without necessary registrations, combining multiple roles without proper approval. The accusations include providing a marketplace for securities transactions, acting as an unregistered exchange, and commingling customer funds with its own. Kraken's CEO disputes the claims, sparking a broader debate on the SEC's role in regulating cryptocurrency exchanges and the industry's future.
JixuSingapore's MAS introduces measures to safeguard against crypto speculation, reinforcing regulatory vigilance and navigating the challenges of Digital Asset Trading.
Hui XinThe founder of Binance, Zhao Changpeng (CZ), recently resigned and pleaded guilty to violating the Banking Secrecy Act. Despite posting a $175 million bail, CZ remains in the United States.
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