Is it a far-fetched idea for the U.S. to establish a strategic Bitcoin reserve?
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Is it a far-fetched idea for the U.S. to establish a strategic Bitcoin reserve?
Legal (U.S. Code). Compliance (accounting standards).
Navigating Web3 tides with focused insightsBy Liu Jiaolian
Overnight, BTC pulled back below its 5-day moving average of $96.8K, briefly dipping under $96K before rebounding and climbing back above the 5-day MA to $97.4K this morning. This looks suspiciously like a well-designed hunt aimed at liquidating long-leveraged positions lying in wait beneath $96K.
Today, let's discuss the idea of the United States establishing a Strategic Bitcoin Reserve (SBR).
The notion of a strategic bitcoin reserve was first publicly proposed by Robert F. Kennedy Jr. during his speech at the Bitcoin2024 conference back in July this year. As recorded in Jiaolian’s article on 2024.7.27 titled "Bitcoin Is Inevitably Entering the Era of National Reserves", Kennedy stated that if elected U.S. President, he would sign an executive order directing the U.S. Treasury to purchase 550 BTC daily until amassing a reserve of 4 million BTC—establishing a dominant position no other nation could usurp.
The following day, Trump attended the same conference and expressed similar views. For details, see Jiaolian’s article from 2024.7.28: "Trump: Bitcoin Will Surpass Gold; the U.S. Must Retain 100% as a National Strategic Reserve".
Later, Trump indeed won the election. Due to his pro-crypto stance, markets began pricing it in. BTC surged rapidly from around $70K on Election Day to nearly $100K within just about 20 days.
Many who failed to understand this development started speculating wildly—claiming BTC is merely a tool created by Americans to exploit others, or that the U.S. establishing a BTC strategic reserve is simply an extension of financial warfare, and so on. These commentators clearly haven't done their homework. Jiaolian suspects whether they’ve ever fully read Bitcoin’s open-source code or seriously studied how the Bitcoin system actually works—or if they’re just fabricating half-baked narratives based on hearsay and imagination, using fear-mongering tones to trigger emotional reactions among followers, drive engagement, and harvest traffic. After all, they don’t really care what BTC truly is—they don’t even hold any. But they do have a strong interest in gaining traffic by crafting sensational horror stories that activate the amygdala of their audience, triggering fear and prompting viral sharing.
Anyone with even a basic grasp of computer science knows that Bitcoin’s code is entirely open source. Anyone can download and audit every line. Satoshi couldn’t possibly have hidden a backdoor. The eyes of the public are sharp. Anyone can modify the code. The hard part is: why would anyone else use your modified version? If you can’t convince thousands of decentralized nodes worldwide to run your forked code, your changes are meaningless. That’s called mass consensus.
Bitcoin’s mass consensus operates purely on voluntary adoption.
Rousseau and Hobbes believed entities like the state arose from voluntary social contracts. But that’s not true. From a materialist historical perspective, the state is an evolutionary product of top-down rule through violence. Was any individual ever born signing a contract with the state? No. Every infant is passively—or forcibly—subjected to an existing national structure. There’s no personal will involved, no choice, not even options.
Voluntarily embracing BTC is akin to being reborn. This time, it's a transnational, internationalist, global human consensus—a consensus voluntarily formed.
No one is forced through the gates of BTC. And no one can force another. I cannot force you. You cannot force me. Not even the United States can.
Even a power as mighty as the U.S. government cannot simply alter the code rules to plunder other BTC holders—say, granting itself the power to inflate the BTC supply—unless it first compels tens of thousands of globally distributed nodes to accept its modified code, and further forces hundreds of millions of global holders to recognize its corrupted version of BTC.
Therefore, even the U.S. government must abide by the unbreakable rule of Bitcoin’s 21 million cap. If it wants to build a national strategic reserve, it has no choice but to patiently buy BTC from the market, from other people’s hands, at a fair and reasonable price.
If the U.S. government unilaterally altered the code and inflated BTC supply, the vast majority of global participants opposing such inflation could unite, run the original Satoshi version without inflation, refuse to run or recognize the tampered, inflated BTC—and the U.S. government would be powerless.
Some argue that the idea of the U.S. using a BTC strategic reserve to repay national debt sounds like science fiction, too far-fetched. They probably aren’t aware of history. Even more radical and seemingly “less credible” ideas have been seriously proposed before.
During the 2011 U.S. debt ceiling crisis, someone suggested minting a single $1 trillion platinum coin by the U.S. Treasury and using it to pay down part of the national debt—thus creating new borrowing headroom and allowing continued deficit spending.
Well, believe it or not, this was genuinely considered a “brilliant” idea!
Legally speaking, under Section 5112 of Title 31 of the U.S. Code (enacted in 1997), the U.S. Treasury has the authority to mint platinum coins of any denomination. Originally intended for commemorative programs, the law contains no upper limit on face value. This legal “loophole” made the trillion-dollar coin theoretically viable as a way to bypass the debt ceiling.
From a financial standpoint, assets, debts, and values are ultimately just numbers on the Federal Reserve’s balance sheet. As long as total assets equal total liabilities, the books balance. The actual valuation of those assets is entirely arbitrary.
For example, as detailed in Jiaolian’s article on 2023.12.10 titled "The 'Truth' Behind the Federal Reserve", we deconstructed the Fed’s balance sheet. Regarding gold holdings, as calculated in the 2023.11.14 article "How Much Gold Does the U.S. Actually Hold?", the Fed holds 261 million troy ounces (8,133 metric tons) of gold. However, instead of valuing it at market prices, the Fed uses a statutory bookkeeping value defined in 31 USC §5116-5117: $42.2222 per troy ounce.
If valued at today’s spot price of approximately $2,700 per ounce, this gold would be worth nearly $700 billion.
Dear readers may wonder: Why does the Fed artificially suppress the book value of its gold via accounting methods? Explaining this fully would take us too far off track. Reviewing Jiaolian’s related articles should help you arrive at your own conclusions.
Jiaolian cites this example of artificial gold valuation merely to illustrate that recording a $1 trillion platinum coin on the Fed’s balance sheet as a $1 trillion asset is entirely feasible from an accounting perspective.
This could then offset an equivalent $1 trillion in U.S. Treasury bonds held as assets on the Fed’s balance sheet.
With the current U.S. national debt exceeding $36 trillion, minting 36 such $1 trillion coins could theoretically erase the entire debt!
Legal (per U.S. Code). Compliant (with accounting standards).
But reasonable? Clearly not.
Fiat money, like today’s dollar, derives its value not from the paper or digits themselves, but entirely from the underlying assets on the Federal Reserve’s balance sheet—and whether those assets can support the currency’s value.
From the establishment of Bretton Woods until Nixon’s shock in 1971, the world trusted the dollar because it was backed by gold.
Since 1971, the world trusts the dollar because it is backed by U.S. Treasuries. And trusting Treasuries, fundamentally, means trusting American national strength.
If $36 trillion in Treasuries were replaced entirely by 36 trillion-dollar platinum coins, would the world automatically accept the value of these coins? If not, the dollar’s value would collapse, turning it into worthless paper.
Hence, the idea of arbitrarily valued platinum coins is clearly unworkable.
But what if, instead of a platinum coin, we substitute BTC—a globally recognized, algorithmically generated, and market-priced asset? Suddenly, this seemingly absurd idea begins to appear somewhat operational.
Let’s conduct a thought experiment.
Suppose the U.S. Treasury borrows some funds to redeem its undervalued gold reserves. Since the gold is currently booked at 1/50th of its market value, this would cost only about $14 billion. It then sells this gold in the open market and converts the proceeds into BTC. Assuming large OTC trades don’t impact market prices, and BTC is priced at $100K, the $700 billion worth of gold could acquire approximately 7 million BTC.
As BTC continues to be accumulated, its marginal price rises. When BTC appreciates 50-fold—from $100K to $5 million—the market value of the Treasury’s 7 million BTC would reach $35 trillion, nearly matching the current scale of U.S. national debt.
Placing 7 million BTC, valued at $35 trillion, onto the Federal Reserve’s balance sheet could allow the elimination of $35 trillion in debt, while maintaining balance sheet equilibrium.
Because the BTC asset is globally recognized and market-priced, the dollars issued against it on the liability side would also gain legitimacy through global consensus.
Asset prices are determined at the margin. Suppose your neighborhood has 10,000 homes, but only 1–2 sell each month. If those few transactions clear at $10 million each, the entire neighborhood’s total asset value is calculated as 10,000 × $10 million = $100 billion. This doesn’t mean $100 billion changed hands—it means the marginal transaction sets the price for all. This is marginal pricing.
As long as the Fed holds its BTC without selling—keeping circulating supply scarce—the marginal price of BTC could remain relatively high. And as long as that marginal price holds, the total market value of BTC assets on the Fed’s balance sheet can be calculated as holdings multiplied by the marginal price.
This forms a hypothetical model: replacing gold reserves with BTC, effectively re-anchoring the dollar from U.S. debt to Bitcoin.
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