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Creating Bitcoin (BTC) strategic reserve might look attractive for Bitcoiners, seasoned researcher and investor Jim Bianco admits. However, once created, it will allow the government to gain too much control over Bitcoin's (BTC) price performance.
Too much power: Bitcoin (BTC) in strategic reserve is bad idea, Jim Bianco says
The Bitcoin (BTC) community might be terribly wrong in its understanding of the potential effects of creating strategic BTC reserve in the U.S. Instead of raising interest rates for BTC, the government might gain too much control over the BTC price in the long haul.
This is why the #Bitcoin Strategic Reserve is a bad idea, according to @biancoresearch pic.twitter.com/b1XkmOLRB9
— David Lin (@davidlin_TV) August 5, 2024
Such warning was shared by macro economist Jim Bianco, the president of Bianco Research, while speaking to journalist David Lin, the host of The David Lin Report.
Retail Bitcoin (BTC) holders will never be aware of the exact strategy of the government's BTC journey. Instead, they will be forced to face the consequences of state-controlled Bitcoin (BTC) price:
Every time a government steps in and does someting like this, they put rules on it. They're going to decide what is the appropriate price for Bitcoin and they're going to sell it when it's too high, they're going to buy it when it's too low, they gonna decide who owns it
As a result, the entire concept of putting Bitcoin (BTC) into the strategic reserve does more harm than good, Bianco concludes.
The announcement about the possibility of creating a strategic reserve in BTC was made by pro-crypto Senator Cynthia Lummis during the Bitcoin Conference 2024 in Nashville, Tennessee, as U.Today covered previously.
To kick off this strategy, Sen. Lummis suggests buying a whopping 1 million Bitcoins (BTC), which is roughly equal to $60 billion.
Hong Kong also considers creating BTC strategic reserves
In 2024, more and more countries are considering using Bitcoin (BTC) as part of strategic reserves thanks to its potential role in addressing inflation issues.
Besides El Salvador's Bitcoin (BTC) saga, Hong Kong, one of the most influential fintech hubs in the world, is considering the reserve status for the largest cryptocurrency.
Former U.S. President Trump recently gave a speech at the U.S. Bitcoin Summit, sharing his views on Bitcoin. Bitcoin and Web3 have already gained the attention and development of countries around the world, and Hong Kong is also actively becoming a hub to promote technological… pic.twitter.com/e1UFCb6g1q
— Johnny Ng 吴杰庄 (@Johnny_nkc) July 28, 2024
As explained by Johnny Ng, HK parliament deputy, with the growing adoption of the "digital gold," it can be added into reserves by different countries.