Key Points：
- Mike Novogratz doubts the U.S. will establish a Bitcoin reserve under a Trump administration.
- Conflicts within government departments could hinder such initiatives.
- Novogratz argues that Bitcoin as a reserve may challenge the USD’s dominance, leading to resistance.
- If the U.S. ever reserves BTC, it could drive a global scramble for the cryptocurrency.
- El Salvador and Bhutan’s current BTC holdings could serve as early examples of nation-state Bitcoin adoption.
Strategic Reserves and the Potential of Bitcoin
Mike Novogratz, founder of Galaxy Digital, recently shared his views on the feasibility of Bitcoin becoming a strategic reserve for the United States under Donald Trump’s leadership. He expressed skepticism, citing inter-departmental tensions and the stronghold of the U.S. dollar as global reserve currency. However, he believes that if the U.S. were to reserve Bitcoin, the cryptocurrency could soar to unprecedented levels, possibly catalyzing a worldwide race for BTC acquisition.
U.S. Dollar vs. Bitcoin: Novogratz’s Perspective
Novogratz argues that the U.S. dollar’s dominance as the world’s reserve currency lessens the likelihood of Bitcoin’s adoption as a strategic reserve in the near future. In an interview with Bloomberg TV, he stated that the current administration values the dollar’s international influence and military power. To integrate Bitcoin might disrupt these established power structures.
Novogratz highlights that the U.S. already possesses significant economic power and a military presence worldwide, giving little incentive to shift toward Bitcoin. However, he noted that if Bitcoin were to be held as a reserve, it could reach extraordinary values, potentially as high as $500,000 per coin. This scenario could lead other nations to start stockpiling BTC, driven by a desire to stay economically competitive.
Global Bitcoin Arms Race: Potential Catalysts
Novogratz speculates that a U.S. move toward a Bitcoin reserve could incite a “HODL race,” where countries accumulate BTC in anticipation of its increased value and influence. If the U.S. were to adopt BTC as a reserve, it might force other countries to follow suit, especially as the digital asset becomes scarcer.
For instance, El Salvador’s decision to make Bitcoin legal tender in 2021 under President Nayib Bukele has already inspired other countries to accumulate digital assets. Bhutan, too, has been discreetly mining and holding Bitcoin, amassing around $780 million in digital assets as of September 2024. Such initiatives highlight a growing trend of smaller nations recognizing Bitcoin’s potential.
The Case of El Salvador and Bhutan: Early Adopters
El Salvador has led the way as a pioneering country, integrating Bitcoin as legal tender and steadily increasing its BTC reserves. This strategy has yielded significant returns, especially as Bitcoin’s value has recently surged. Bhutan, meanwhile, has maintained a quieter approach by mining Bitcoin and building substantial reserves.
El Salvador’s holdings have reportedly generated nine-figure profits, and Bhutan’s portfolio now exceeds $1 billion. Both nations exemplify the early-stage adoption of Bitcoin as a financial asset within sovereign reserves, potentially inspiring other small nations to follow their lead.
Is the U.S. Ready for Bitcoin as a Strategic Reserve?
While Mike Novogratz doubts that Bitcoin will become a strategic reserve asset for the U.S. anytime soon, his predictions shed light on the potential ripple effects if such a move were to occur. The rise of smaller nations like El Salvador and Bhutan embracing Bitcoin demonstrates how Bitcoin could gradually influence global finance. If Bitcoin’s value continues to grow, the idea of strategic reserves might gain traction, leading to a new era of financial competition among nations.
