Since Donald Trump won the US presidential election, bitcoin advocates have increased their campaign to convince the Republican to bet everything on cryptocurrencies. And the past and future president does not stop giving signs that he is interested in these assets: from launching his own cryptocurrency to appointing a ‘crypto fan’ as the next president of the US Securities and Exchange Commission. But the risks of cryptocurrencies remain just as real, and the financial agency Bloomberg Today he launched his biggest argument against the gigantic bet that Trump’s most ‘crypto’ environment is planning.
The key is in the possible ‘Strategic Bitcoin Reserve’ that Republican Senator Cynthia Lummis has proposed. His plan would involve using the Fed’s ‘treasure trove’, the more than $650 billion in gold that it ‘hides’ in its balance sheet, to buy a million bitcoinsthus becoming the largest holder of this cryptocurrency in the world. That reserve would be kept for 20 years, and could be sold only to pay the US public debt with the profits it generated.
But Bloomberg has sounded a warning in an editorial published this Monday, warning of the negative consequences it could have. The main one is that This strategic reserve would have no purpose, beyond the purely speculative.. Unlike stocks, mortgages or debt bonds, bitcoin does not generate any interest or dividendsnor can it be used to regulate the financial market and promote employment. Unlike oil, wood or uranium, It has no energy or industrial use that justifies its accumulation for emergencies. And, unlike milk, wheat or medicine, bitcoin cannot be used to keep citizens alive.
Thus, explains the financial medium, “it is a purely speculative asset, completely disconnected from the real economyand its value depends solely on what a ‘bigger fool’ is willing to pay for it.” And, as he warns Bloombergthis reservation It would mean turning the US Government into the “biggest fool of all”: The purchase would mean, in practice, a massive bailout of bitcoin investors, ensuring them the possibility of selling and obtaining hard dollars paid by taxpayers. In exchange, the US Government would be left with some tokens without any use or profitability, and with the obligation to keep them in a drawer for 20 years creating dust until, when the day came, it would have to start looking for someone to put those in. bitcoins, with the risk that no one will be willing to pay as much for them as he has paid now.
Not only that, but since only a small percentage of all bitcoins created to date are actually on the market, the announcement of the forced purchase of a large number of those bitcoins would skyrocket their price, creating an even greater speculative surge. . That extra cost would have to be paid by the Treasury “further increasing the nation’s public debt and its interest, or forcing the Fed to print moneyincreasing inflation and weakening the dollar.”
But the risks do not end there. The support of the US Government, and the offer of a guaranteed purchase to those who want to sell them, could prompt financial institutions to buy bitcoins to take advantage. And if these institutions end up accepting cryptocurrencies as collateral for loans to invest in these assets, the risk is that A collapse in the value of bitcoin will cause another 2008-style financial crisis. In that case, Bloomberg warns, the US Government could be forced to rescue banks that found themselves with a hole of billions in ‘evaporated’ bitcoins, with the problem that The Government itself would be one of the victims: the Treasury could suddenly lose hundreds of billions.
All of this is summed up in an enormous “irony,” he explains. Bloomberg. “Bitcoin was essentially an anarchist project that allowed people to transact without relying on intermediaries or governments. Now, The middlemen who dominate the market are pressuring the Government to give them what amounts to a huge subsidy“. In his opinion, “if Trump wants to reopen the cryptocurrency casino, so be it. But what happens in crypto should stay in crypto. “Putting taxpayer money on the table could put millions of Americans at risk.”
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