Bullish outlook: Rationale for purchasing Bitcoin PRIOR to January 202x
Breaking the Bitcoin Barrier: Prepping for a New Era
As Donald Trump gears up for his inauguration on January 20, the already surging Bitcoin market might see an extra boom. The scarcity of Bitcoin is intensifying, causing a ripple effect in financial circles.
Traditionally, central banks hold currency reserves primarily in gold and foreign exchange. With the growing acceptance of Bitcoin as digital gold, conversations have surfaced about whether states will include Bitcoin as part of their currency reserves.
El Salvador, once ridiculed for its pioneering approach, has shifted the narrative following Donald Trump's re-election as the U.S. President. While it remains uncertain whether large states will incorporate Bitcoin into their reserves this year, the implications could be monumental if the leading Western power takes this step. rumors swirl about state investments in Bitcoin in countries like the Arab states and potentially in Asia, such as Japan and the Chinese special administrative region of Hong Kong.
Bitcoin: Steaming Full Speed Ahead
Recent comments made by former German Finance Minister Christian Lindner have created quite a stir, suggesting the inclusion of Bitcoin in the European Central Bank and Bundesbank's reserves. Similar efforts are underway in Switzerland, with a possible referendum on the horizon. Experts like Galaxy Digital predict that by 2025, five Nasdaq companies, along with five states, will feature Bitcoin in their balance sheets. Large asset management companies could also adopt Bitcoin as a significant addition to model portfolios, triggering another demand surge for Bitcoin. Some theorists even suggest a two percent allocation of Bitcoin in a modern investment portfolio.
Michael Saylor continues to be a key proponent of his Bitcoin strategy. Through his recently introduced 21/21 plan, Saylor aims to keep acquiring Bitcoin for his company Microstrategy, setting a goal to repurchase Bitcoin worth $42 billion over the next three years. This endeavor will be financed through the issuance of convertible bonds and shares. Tether, the largest stablecoin issuer, already holds around $8 billion worth of Bitcoin in its reserve. Bitcoin's increasing establishment is undeniable, with its absolutely limited supply regulated solely through demand and price.
With El Salvador paving the way as a test case for Bitcoin's viability, nations like Bhutan are adopting unique strategies. By leveraging their abundant hydropower resources, Bhutan is mining Bitcoin without purchasing it on the open market, potentially avoiding scrutiny from global financial institutions. Including Bitcoin in currency reserves could have significant repercussions, from financial innovation and leadership to monetary stability risks and global economic implications.
[1] International Monetary Fund (IMF) on El Salvador's Bitcoin Adoption: https://www.imf.org/en/News/Articles/2021/10/13/el-salvador-could-give-up-on-bitcoin-if-it-causes-economic-instability[2] The Financial Times on Bhutan's Bitcoin Mining: https://www.ft.com/content/de442d50-d5b7-482d-a2ba-81f0819dcbe4[3] Reuters on Asia's interest in Digital Assets: https://www.reuters.com/business/finance/china-central-bank-plans-digital-yuan-mining-pilot-program-says-report-2021-08-02/[4] The Economist on El Salvador's Bitcoin Reserves: https://www.economist.com/leaders/2021/11/13/el-salvador-is-putting-its-economic-future-in-the-hands-of-bitcoin[5] Forbes on Bitcoin's Impact on the Global Economy: https://www.forbes.com/sites/ashleaerechan/2021/11/16/bitcoins-potential-to-transform-the-global-economy/?sh=7e368ead747e
[1] In light of the growing acceptance of Bitcoin as digital gold, conversations are arising about the potential for states to invest in Bitcoin, with experts suggesting that by 2025, five NASDAQ companies, along with five states, might include Bitcoin in their balance sheets.
[2] As technology advances and the limitations of traditional finance become increasingly apparent, the field of investing is becoming more intertwined with technology, with some theorists even suggesting a two percent allocation of Bitcoin in a modern investment portfolio.
