Strategic Bitcoin Reserve Proposal Could Boost Adoption In The US

According to Cointelegraph, the establishment of a strategic Bitcoin (BTC) reserve in the United States could significantly enhance Bitcoin adoption, potentially surpassing the impact of the anticipated 2024 exchange-traded fund (ETF) launches. This insight was shared by cryptocurrency researcher CoinShares in a blog post dated January 10. In 2024, US lawmakers introduced the Bitcoin Act, a proposal aimed at directing the US Treasury Department to establish a 'strategic Bitcoin reserve' by acquiring 1 million BTC over a five-year period. The plan has received endorsement from President-elect Donald Trump, although it has yet to be enacted into law. CoinShares emphasized that the implementation of the Bitcoin Act would likely have a more substantial long-term effect on Bitcoin than the introduction of ETFs. CoinShares highlighted that interactions with institutional clients revealed that Bitcoin's credibility as an asset class remains a significant hurdle for institutional adoption. The passage of the Bitcoin Act could alleviate this stigma by effectively providing Bitcoin with the endorsement of the world's largest government, thereby encouraging institutional investors. The Bitcoin Act, introduced by US Senator Cynthia Loomis in July, has gained momentum following the November US elections, where Trump's Republican party secured control of the Senate. Additionally, several US states, including New Hampshire and North Dakota, have proposed bills to establish BTC reserves. These legislative efforts coincide with the January 2024 approval by US regulators of nearly a dozen spot BTC ETFs, which collectively surpassed $100 billion in net assets for the first time in November, as reported by Bloomberg Intelligence. Crypto analysts at Steno Research anticipate further net inflows of $48 billion into BTC ETFs by 2025. The surge in institutional inflows could lead to positive demand shocks for Bitcoin, potentially driving its price higher in 2025, according to asset manager Sygnum Bank. The enactment of the Bitcoin Act could further accelerate this trend, potentially pushing BTC's spot price beyond $1 million per coin, as suggested by Adam Back, co-founder and CEO of Blockstream. CoinShares noted that if other governments follow suit, such developments could trigger a substantial increase in asset flows into Bitcoin in the coming years.