Bitcoin
This is Why US States’ Bitcoin Reserves Could Spike BTC Price
Currently, 20 US states have active proposals to create their own Bitcoin Reserve, several of which are advancing. These bills contain legal obligations to purchase $23 billion in Bitcoin, which would fuel huge demand.
These bills may also encourage some US states to invest their pension funds in Bitcoin, adding further demand. BTC is on the cusp of a supply shock, so even a few successful bills could have a dramatic impact.
US States Want Bitcoin Reserves
Since President Trump first vowed to create a US Bitcoin Reserve, several states have attempted to develop their own BTC stockpiles. Matthew Sigel, Head of Digital Assets Research at VanEck, assessed these proposals, looking for specific purchasing obligations contained within.
He found many and determined that they could have a real impact on Bitcoin’s price.
“We analyzed 20 state-level Bitcoin reserve bills. If enacted, they could drive $23 billion in buying, or 247,000 BTC. This sum is independent of any pension fund allocations, likely to rise if legislators move forward,” Sigel claimed.
Although President Trump created a US crypto stockpile by executive order, this doesn’t quite fulfill his campaign promise. Still, several states are trying to pass their own Bitcoin Reserves, and a few proposals have advanced quite far.
Utah’s Bitcoin Reserve bill made it through the first committee, and both Oklahoma and Arizona also reached this threshold. This afternoon, North Carolina sent its bill from the introduction stage to the Committee for Commerce and Economic Development.
If all these Bitcoin Reserve proposals are passed into law, it will have a huge impact on the price of Bitcoin. These initial proposals will demand that the relevant states purchase BTC worth $23 billion.
That doesn’t account for other assets like state pension funds, which would become entangled with these reserves in at least a few cases.
More to the point, however, this analysis only looks at the bills in isolation. If over a dozen US states are legally required to put Bitcoin in their new Reserves, it could spur demand from ordinary consumers.
Bitcoin is already on the cusp of a supply shock, which may happen before any of these bills become law. Still, they could be an atomic bomb on top of the current demand.
In short, the whole situation has explosive potential. The current supply of Bitcoin is unable to meet growing consumer demand, and up to 20 state-level Reserves could pile on.
It’s difficult to assess how many of these bills may succeed or fail, but even a few successes could be big. Most importantly, a federal Bitcoin Reserve could change the equation altogether.
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