Bitcoin
US Bitcoin Reserve Idea Slammed By Editorial As ‘Biggest Scam’ Yet
Bloomberg, one of the US’ leading business and financial news sources, has targeted Bitcoin and the proposed strategic reserve. In an opinion piece published December 9th, Bloomberg’s Editorial Team posed a serious policy question: Does the government need a Bitcoin strategic reserve?
For the news organization, the answer is “no,” saying that the US government doesn’t need to approve the proposal and calling it the cryptocurrency industry’s “biggest rip-off yet.”
The world’s top digital asset has surged by over 50% since November 4th and moved past $100,000 a few days ago. This latest Bitcoin price run has inspired crypto enthusiasts and top industry personalities to renew their call to legitimize Bitcoin as a financial asset and integrate it into the national reserve as a potential hedge against inflation.
Bitcoin As A Purely Speculative Asset, With No Other Purpose?
The US government maintains different strategic reserves, including oil, under its Strategic Petroleum Reserve (SPR). This is considered the country’s emergency oil stockpile and currently the world’s largest. The US government started this program in 1975 to anticipate future supply disruptions.
Image grab/Source: Bloomberg
According to the Bloomberg editorial, oil is the country’s strategic reserve. The US government maintains the reserve to ensure a steady oil supply, and the Federal Reserve buys and sells oil to support employment, low inflation, and manage the financial system.
Buying Bitcoin and adding it to the national reserve, according to Bitcoin, doesn’t serve the same purpose. The editorial pointed out that buying and holding BTC has no industrial use or real connection to the economy. In short, Bloomberg’s Editorial Team calls Bitcoin a “purely speculative asset,” where the price is based on what the “greater fool” is willing to pay.
I didn’t expect this from Bloomberg’s Editorial Board, but can’t disagree:
“Buying Bitcoin with taxpayer dollars would serve no such public purpose. It has no industrial use, no claim to actual cash flows, no connection to the real economy. It’s a purely speculative instrument.…
— Samantha LaDuc (@SamanthaLaDuc) December 10, 2024
The Government’s Risk In Bitcoin Investing
As a speculative asset, the Bloomberg opinion piece offered a few warnings. Bloomberg continues that the government is only wasting money when buying these assets. The op-ed further explains that if the government pursues its plan, it will only increase the national debt or create new money, adding to inflation and affecting the US dollar.
And since the world’s top digital asset is purely speculative with no intrinsic value, then there’s a probability that this “Bitcoin reserve” can become worthless soon. Bloomberg also warns that adopting BTC as a reserve may affect the country’s economy and financial structure.
BTC May Benefit A Few Holders, Investors
According to Bloomberg, banks and other financial institutions may also suffer from the planned arrangement. If they accept BTC as collateral, this can decrease the asset’s price, leading to a financial collapse and even a bailout. Bloomberg says adopting Bitcoin in the finance sector is risky.
The Editorial team is also quick to note that while the public and banks may suffer, a few holders will benefit from the plan. Bloomberg argues that current holders and early adopters will get rich in the scheme while the government (and the general public) becomes the “greater fool.”
Featured image from Reuters, chart from TradingView