Donald Trump's Proposal for a $90 Billion U.S. Bitcoin Reserve Sparks Debate Among Financial Experts

Advocates like Anthony Pompliano call it a vital step to counter the growing crypto influence of nations like Bhutan and El Salvador, while critics question its feasibility and impact.

Donald Trump’s proposal to establish a $90 billion U.S. Bitcoin reserve has sparked a heated debate among financial experts. While advocates like Anthony Pompliano argue that the move is crucial to counter the growing crypto influence of nations like Bhutan and El Salvador, critics remain skeptical about its feasibility and impact.

Bhutan and El Salvador have already integrated Bitcoin into their national reserves, highlighting the strategic importance of establishing a U.S. Bitcoin Reserve, according to Anthony Pompliano, founder and CEO of Professional Capital Management, as reported by Coingape.

Despite Bhutan's current status as a small global economy, its aggressive approach toward Bitcoin could propel it to become a major economy in the future, Pompliano noted, emphasizing the need for immediate action within the U.S. Notably, Bhutan's Bitcoin holdings recently surpassed the $1 billion mark.

The market analyst further highlighted El Salvador's potential to become a world economy as a result of its exposure to Bitcoin. When asked to elaborate on the necessity of the Bitcoin reserve, Pompliano stated:

“This asset (Bitcoin) is so asymmetric. If it continues to propel, it will translate into billions of dollars on their balance sheets while the US struggles with a growing national debt.”

During a speech at a Bitcoin conference in July, ahead of the election, Donald Trump mentioned that the U.S. would be keeping all of its Bitcoins to create a U.S. Bitcoin Reserve for the "good of all Americans."

While the outcome remains uncertain, the concept evolved into what crypto enthusiasts now refer to as a strategic U.S. Bitcoin reserve; some, such as Senator Cynthia Lummis, have even proposed selling gold to acquire up to 1 million Bitcoins. With such a Bitcoin reserve, the United States would dominate the Bitcoin economy, which is currently valued at almost $90 billion at today's market prices.

The idea behind a Strategic U.S. Bitcoin Reserve is to create a government-held asset that can bolster the economy during financial turbulence.

Given its decentralized and scarce nature, a BTC reserve could serve as a valuable tool in the fight against inflation, currency devaluation, and global economic instability. Donald Trump's stance aligns with the rising trend of governments embracing Bitcoin as a "digital gold" and its appeal among nations seeking financial independence.

Highlighting the disparity between Bitcoin's and gold's market capitalizations, which currently stand at $1.7 trillion and $17 trillion, respectively, Pompliano drew a comparison between the two. He predicted that Bitcoin's market capitalization would surpass gold's due to its superiority as a digital store of value.

Institutions are always outpacing their analog counterparts in the digital realm, according to Pompliano. He argued that protecting money from inflation and currency devaluation is a global concern that Bitcoin's primary use case—storing value—solves. According to him, Bitcoin offers a deflationary, capped alternative to fiat currencies that nations and individuals may choose from, while central banks are always devaluing them.

Pompliano went on to explain how that could be a secondary effect of Trump's plan to establish a U.S. Bitcoin reserve.

If the federal government is willing to invest in Bitcoin, then all levels of government should follow suit. “You’re sitting with cash that's guaranteed to lose value. Sitting in 100% cash is the wrong answer if you want to fulfill your fiduciary duty,” he claimed.

Pointing to MicroStrategy's performance under Michael Saylor's leadership, which included the acquisition of 27,200 BTC, he claimed that massive institutional investment in Bitcoin shielded investors against inflation. Furthermore, Pompliano urged governments worldwide to "get off zero" and consider allocating at least one percent of their budget to Bitcoin.

Despite President-elect Donald Trump's proposal, billionaire Galaxy Digital CEO Michael Novogratz expressed doubt about the idea of strategically adopting a U.S. Bitcoin reserve. He was adamant that the Bitcoin reserve would not materialize under Trump.

However, he did acknowledge the potential strategic benefit of such a move. “It would be very smart for the United States to take the Bitcoin they have and maybe add some to it,” he suggested. “That would signal to the world that we are a technology-first country, a crypto, digital asset-first country. I don't necessarily think that the dollar needs anything to back it up, but it would make a statement.”

Bitcoin Hits Record $90,291 Amid Reserve Speculation

According to Novogratz, the establishment of a U.S. Bitcoin reserve would result in a substantial price increase for Bitcoin. “If we get the BTC reserve, as a guy who owns a lot of Bitcoin, I won't cry,” he joked. “I think Bitcoin heads to $500,000. It's a different paradigm because it forces every