Trump's call, will BTC surpass gold to become a global strategic reserve asset?

Author: Biteye core contributor Viee

Editor: Biteye Core Contributor Crush

“Never sell your BTC,” Trump said at the BTC2024 conference in Nashville this weekend, providing the crypto world with the strongest emotional value in recent times.

During Trump’s speech, BTC showed a V-shaped trend, first declining in the short term, breaking below $67,000; at the end of the speech, when he announced that BTC would be classified as a strategic reserve asset, BTC skyrocketed, recovering all the losses and even breaking through $69,000.

During his previous presidency, Trump harshly criticized Cryptocurrency as “eyewash.” But now, he even bluntly stated at the BTC conference, “BTC has become the ninth largest asset in global market cap rankings and will soon surpass silver, and in the future, it will surpass gold.”

Such a major shift can be seen as Cryptocurrency users becoming a growing political force.

**From the “eyewash of the Internet” to the “tool of politicians’ lobbying”, ten years have passed, what exactly has enabled BTC to turn things around?

01, Gold out, BTC in: The value reserve of the new era

Not only Trump, but Mike Novogratz, CEO of asset management company Galaxy Digital, has also publicly stated, ‘Although the current Market Cap of BTC is less than one-tenth of gold, it is rising rapidly and will definitely surpass the Market Cap of gold, and it won’t be long.’

Michael Saylor, CEO of MicroStrategy, shares a similar view that “digital gold” will replace physical gold by the end of this century.

Has anyone ever wondered why so many world-class experts have no reservations about their belief in Bitcoin? Is it a fantasy or is there solid evidence?

First, you need to know, why can BTC be similar to gold?

• Scarcity. The total amount of BTC is fixed at 21 million, and it is expected that all BTC will be mined by 2140. This limited supply gives BTC a similar scarcity to gold.
• Inflation resistance. BTC, as the “digital gold”, is considered an effective hedge against inflation. Although BTC has only been around for about ten years and has only experienced inflation during the COVID-19 pandemic, its unique algorithm and distributed system give it the ability to resist inflation. Research from J.P. Morgan shows that institutional investors are increasingly choosing BTC over gold as a safe haven asset.
• Actual value. The value of gold comes from its widespread use in luxury goods and electronics. The value of BTC comes from its innovation in the currency system, and its encryption technology and distributed network enable billions of people worldwide who have not entered the banking system to enter the financial system.

Since both assets are popular, what is the real reason that BTC is superior to gold?

The answer lies in the performance and supply of returns, BTC has enjoyed an annual return of nearly 120% in the past decade, while the annual return of gold is only 2%. Unlike gold, BTC has a clear upper limit on supply, ensuring its intrinsic scarcity.

Gold has always been a symbol of store of value and wealth preservation. However, in the decades since the end of inflation in the 1970s, the performance of gold has been relatively lackluster.

From 1980 to the end of 2023, the total inflation-adjusted return of gold is -4%. In the past decade, the annual return rate of gold is only 2%.

In addition, the supply of gold is also difficult to control, mining and new discoveries make its quantity uncertain. Even in history, the United States confiscated gold through Executive Order 6102, which is a weakness of gold being easily intervened by the government.

However, BTC is emerging with unparalleled advantages. As the world’s first cryptocurrency, BTC not only has strict limitations on supply, with a total fixed at 21 million, but also ensures its scarcity by ensuring that no one can change its supply.

In the past decade, BTC’s annual return rate has reached 120%, a staggering number that far exceeds gold. Moreover, based on the global Blockchain network, BTC provides investors with an unprecedented sense of security with its characteristics of immutability and non-confiscation.

As the market gradually matures, the volatility of BTC is also gradually decreasing, bringing more stable opportunities for long-term investors.

More importantly, BTC gives holders real financial sovereignty, free from currency manipulation, perfectly adapting to the needs of the digital age.

So, BTC came on the scene and became the new era’s store of value!

02, The New Global Financial Trend: BTC Moves towards National Strategic Reserves

As mentioned earlier, Trump mentioned at this conference that he would list BTC as a strategic reserve asset, directly pushing the price of BTC to climb above $69,000.

The original words were: “If elected, my government’s policy will be that the United States will retain 100% of all BTC currently held or acquired in the future. We will retain 100%. Hope you do well. This will actually serve as the core of the strategic national BTC reserve.”

Although this commitment is relatively conservative, it undoubtedly highlights the importance of BTC as a global financial asset. Trump also openly criticized the Biden administration’s suppression of Cryptocurrency, stating that this policy has caused damage to the U.S. economy.

Unlike Trump’s caution, independent presidential candidate Robert Kennedy has shown a more radical vision.

He promised that if elected, he would launch a grand BTC reserve plan - buying 550 BTC every day until the reserve reaches 4 million. This proposal is far bolder than Trump’s plan, aiming to build BTC into a national strategic asset.

In Wyoming, Senator Cynthia Lummis is also actively promoting the national reserve plan for BTC. She plans to draft a bill that requires the government to establish a reserve of up to 1 million BTC within five years and only use it to reduce national debt over the next 20 years.

This plan undoubtedly strengthens the position of BTC as a long-term financial asset.

The above public remarks have quickly pushed BTC into a hot topic in the global financial and political fields. We all know that national governments may hold BTC as reserve assets, for example, the US government is one of the largest holders of BTC, with the federal government holding nearly 210,000 BTC, accounting for 1% of the total supply.

In 2021, El Salvador announced BTC as its official currency anchor, becoming the first country to adopt BTC as legal tender. In addition, Switzerland has also legislated to include BTC in its national bank reserves.

So, what does this actually mean?

Take a look at a set of data, according to VanEck’s report assumption, BTC may become an important part of the International Monetary System in the coming decades as geopolitical tensions and debt repayment costs put pressure on the existing system.

The report predicts that the global reserve asset status of BTC will gradually rise, and its proportion in international forex reserves is expected to reach 2.5%.

In this way, it can be seen that BTC is gradually transforming from an emerging asset to an important component of the global financial system. Whether in the United States or the international market, the status of BTC is rising rapidly.

So, Hong Kong is not to be outdone either.

The Co-Chairman of the Hong Kong Blockchain Association, Fang Hongjin, recently suggested that the Hong Kong government should use the anti-inflation characteristics of BTC to diversify the asset allocation of forex funds, reduce dependence on the US dollar, and continue to purchase and hold BTC as part of forex reserves.

He believes that BTC not only has the potential to surpass gold, but also can significantly enhance Hong Kong’s influence in the global financial market.

Hong Kong Legislative Councilor Wu Jiezhuang also expressed support for this trend when commenting on Trump’s speech at the BTC summit in the United States.

He believes that BTC and Web3 are key Nodes for global development, and in the future, BTC can be included in official financial reserves under Compliance.

He also emphasized that Hong Kong should accelerate the construction of the Web3 ecosystem to attract top global talent and investment.

Hong Kong is actively exploring the possibility of including BTC in forex reserves, following closely in the footsteps of this trend. All of this is showing us that BTC could become a key pillar in the global financial system.

From the United States to Hong Kong, more and more long government and Financial Institutions are paying attention to the unique advantages of BTC.

03. Summary

In this increasingly digital and world of continuous depreciation of fiat currency, BTC, with its scarcity, high returns, and financial sovereignty, is gradually replacing gold as the choice of value reserve for a new generation.

In the next few years, this trend is expected to further drive the rise of BTC in the international market.

If the BTC falls from 60,000 to 50,000 now, and you can’t even eat or sleep, let me tell you a horror story: if it reaches the Market Cap of gold, the price of one BTC may soar from the current $69,000 to nearly $600,000.

Maybe then you will be able to appreciate the weight of the phrase “Never sell your BTC”.