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The danger to our financial future does not come from crypto, it comes from Washington D.C.
That quote is from former (and possibly future) President Donald Trump from the Bitcoin 2024 conference in Nashville, TN. Among a handful of very interesting quotes from that conference, this one really stands out to me as significant. Trump's presence at Bitcoin Magazine's conference this year marks the first time a former US President has spoken at the annual gathering since its inception in 2019.
In this article, I'll go over some of my top takeaways from the event, dive into the current status of nation-state held Bitcoin (BTC-USD), and address some of the long-term concerns I still have for the network.
Takeaway 1: Trump's Keynote
During roughly 45 minutes at the podium, former President Donald Trump weaved in and out of unrelated campaign talking points and Bitcoin-related promises. Among the latter, Trump pledged the following if elected:
- The Day 1 firing of US Securities and Exchange Commission Chair Gary Gensler and the appointment of someone more industry-friendly - this garnered a loud standing ovation
- The shutdown of what has been dubbed in the industry as "Operation Choke Point 2.0"
- The formation of an advisory council consisting of industry leaders to help form pro-crypto policy
- A defense of the right to self-custody digital assets
- A stablecoin-friendly administration
- No central bank digital currency
- An order to cease the selling of the nearly 214k BTC currently held by the United States government
Simply on the merits of Trump's commentary specifically pertaining to Bitcoin and the cryptocurrency industry in the United States, it's difficult to imagine digital asset investors needing much more than what they got from that speech to be excited for the future, in my opinion. Short of calling BTC legal tender, as Salvadoran President Nayib Bukele did in 2021, Trump's keynote in Nashville was a monumental moment in Bitcoin's history. If elected, I suspect most of what he laid is actually somewhat feasible politically.
Takeaway 2: RFK Jr's Executive Orders
Not to be outdone by former President Trump, fellow presidential hopeful Robert F. Kennedy Jr. was even more aggressive in his plan for government-held Bitcoin. RFK Jr. said that if elected to the office, he'd sign, not one, but two Bitcoin-related executive orders on Day 1 as President:
- Executive Order #1: the US DOJ would be instructed to transfer the BTC that it acquired through asset seizures to the US Treasury Department where it would be stored as a strategic asset
- Executive order #2: additionally, the US Treasury Department would be required to buy 550 BTC daily until a 4 million BTC reserve had been amassed
Order number 1 seems realistic from where I sit. Executive order number 2 is far less feasible without hyperinflating the dollar, in my opinion. For starters, at a rate of 550 BTC per day, it would take 20 years to build a stockpile of 4 million BTC. Since the currency is capped at 21 million, 4 million would be 19% of the total supply. Kennedy noted this would put the country's share of BTC supply in line with its share of global Gold supply. While this would be nice, the reality is BTC's emission rate declining every four years makes such a proposition mathematically dubious to say the least.
Miner Revenue (Bitcoin Magazine PRO)
At current block reward rates, there are roughly 475 new BTC coming into existence each day. This means right off the bat, we would already have a 75 BTC supply deficit if the United States Treasury put a 550 daily BTC bid into action early next year. This BTC deficit would continue all the way to a daily deficit of 535 BTC, given five additional block reward halvings over the next 20 years. Kennedy acknowledges this strategy would result in a multi-hundred trillion valuation for Bitcoin. If we take a $200 trillion market cap as a base case and divide that valuation by 21 million total coins, we get a BTC price projection of over $9.5 million per coin.
Beyond his plans to aggressively create a BTC stockpile, RFK Jr shared what I view as a principled take on Bitcoin, and it's role in the world. He alluded to how Bitcoin is a permission-less monetary asset. A real-world utility for Bitcoin is when nation-states weaponize banking systems against their own citizens, as we recently observed in Canada during the COVID-era trucker protest. Kennedy seems to 'get it' on the ethos of the network and its early adopters.
Takeaway 3: Lummis' Treasury Bill
Making many of the same points as both Trump and Kennedy, Wyoming Senator Cynthia Lummis took it a step further and announced her plan to introduce a new bill that would direct the United States Treasury department to build a "stockpile" of 1 million BTC over the next 5 years. At current prices, a stockpile of 1 million BTC would be valued at about $68 billion. A 5-year, 1 million BTC plan would break out to a nearly identical daily BTC bid from the US Treasury as what Kennedy would propose. Which I still view as mathematically dubious given what it would cost taxpayers. Lummis acknowledged that her Bitcoin treasury bill is unlikely to pass this year, and that consideration likely won't come until after the election in November.
Takeaway 4: Echoes From Saylor
Arguably taking the Bitcoin as a strategic reserve momentum even further than the speakers already mentioned, MicroStrategy (MSTR) Chairman Michael Saylor made what could be seen as a fairly outlandish statement outside of his podium address. In an interview format portion of the conference, Saylor said the following:
The United States government owns the majority of the Gold in the world. The US federal government owns 28% of the land in the United States. The US Government should own the majority of the Bitcoin in the world.
The bold above is my emphasis. To anyone who has championed Bitcoin for more than 6 or 7 years, this statement is probably concerning. I might be beating a dead horse at this point, as I've brought this up in previous articles for Seeking Alpha several times, but the original intended purpose of Bitcoin was to be a peer to peer medium of exchange. Bitcoin was not supposed to be an asset that is hoarded or one that requires intermediaries to own and transfer. It certainly wasn't intended to be an asset that is owned and managed by the state-run monetary systems that it was originally created to disrupt.
Government Holdings
But given the aforementioned comments at Bitcoin 2024, government-controlled supply is very clearly the direction some of Bitcoin's most notable promoters would like to see. I think that may be a difficult pill for many long time Bitcoin supporters to swallow. However, government holdings of Bitcoin are nothing new. One of the reasons Bitcoin endured some price weakness in late June and in early July was due to the German government selling roughly 48k BTC in less than a month:
Germany BTC Balance (BitcoinTreasuries.Net)
The majority of these sales came over a three-day period between July 9 through the 11th. By that point, the worst in the selling pressure was over. But between the time Germany began selling BTC to the time it was finished, the price of the coin had corrected by nearly 18% in a little over two weeks:
BTC Daily Chart (TrendSpider)
Despite Germany selling out of the country's BTC position entirely, there are still 9 other countries that have control of Bitcoin supply. Though the United States and China own the most out of that group by far:
| Government | BTC | Valuation (m$) | % Of Supply |
|---|---|---|---|
| United States | 213,246 | $14,647 | 1.01% |
| China | 190,000 | $13,051 | 0.90% |
| United Kingdom | 61,000 | $4,190 | 0.29% |
| Ukraine | 46,351 | $3,183 | 0.22% |
| El Salvador | 5,800 | $398 | 0.03% |
| Bhutan | 621 | $43 | 0.00% |
| Venezuela | 240 | $16 | 0.00% |
| Finland | 90 | $6 | 0.00% |
| Georgia | 66 | $5 | 0.00% |
Source: BitcoinTreasuries.Net
Currently, governments make up 2.46% of BTC supply. When factoring in the 5.2% of supply held by ETFs and other investment products, the 1.5% held by public companies, and the 2.8% held by private companies and/or DeFi protocols, more than 12% of BTC's total supply is held by centralized entities. Large ownership of this nature can have a significant impact on price, both to the upside and to the downside. Simultaneous to the Germany sales, there was fear in the market that Mt Gox Bitcoin holdings would find their way to the market as well. Time will still tell on that one.
Regardless of whether or not the United States flips to an aggressive BTC purchasing plan in line with what RFK Jr or Senator Lummis have described on this year's conference, even if the government simply committed to not selling the BTC that it already holds, it would take a large ask off the table:
United States Bitcoin Holdings (BitcoinTreasuries.Net)
At 213k BTC with a market value of $14.6 billion, the United States government already has one of the biggest BTC positions on record. If government holdings were an ETF, it'd be the third largest after iShares Bitcoin Trust ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC).
Closing Thoughts
There is certainly a larger conversation that could be had about just how much Bitcoin any one government or multiple governments should own. For an asset that was designed to be used and held in self-custody, I'm not sure this is the track the original Bitcoiners want to be on. That said, in the game of 'number go up,' the ability to bid with the player who owns the money printer is theoretically an advantageous position to be in. One could even argue the money printer itself is the bull thesis for BTC, whether the government scales a million coin position or not. In my view, there are possibly easier ways for the United States government to build a Bitcoin stockpile if it were inclined to do so; one such method would be to accept BTC as payment for income or capital gains taxes.
I'll close by saying, Bitcoin is going to go where it goes, regardless of what I or any analyst or speaker may think. In some ways, Bitcoin is like the indie band that makes it big but loses some of what made it special to begin with during the process of becoming mainstream. For me, Bitcoin 2024 will be remembered as the conference when Bitcoin became an important part of domestic politics. We now have presidential candidates, one of whom is the favorite in November, openly talking about a Bitcoin reserve strategy. We're either at the top already or the ride is just getting started. In my view, the very reason these concepts are even catching on is because the current monetary system is so inherently flawed. In the era of financial nihilism, Bitcoin is still the best meme.
