Don’t blindly cheer for Bitcoin strategic reserves

Haider Rafique, a global government and investor relations partner at Crypto Exchange OKX, said that establishing a national Bitcoin (BTC) strategic reserve could have a negative impact on BTC and the US dollar.

Rafique told Cointelegraph that any government holding a large portion of its supply of BTC could manipulate prices by shifting its holdings to the market, thus undermining BTC’s core proposition as neutral, diversified funds.

He asked: “If the new government thinks it is a bad idea, what will happen in a few years?” Rafik added:

“Despite recent bipartisan support for cryptocurrencies, it must be remembered that administrative policies may change very quickly. Over time, the concentration of large amounts of BTC concentrated on a country’s balance sheet may represent liquidation risks.”

Rafik said the German government uninstalled an example of 50,000 BTC in 2024, which put the price under pressure below the $60,000 level.

For many Bitcoin advocates, Bitcoin strategic reserves remain the most important, saying that establishing such a nation-state-level BTC Treasury is the next step in making Bitcoin a global reserve currency and standard currency account.

Related: US lawmaker Tap Saylor, Lee promotes Bitcoin reserve bills

Risks in USD and other financial markets

Rafique told Cointelegraph that building a strategic reserve of Bitcoin could have a contagious nature that is not limited to crypto markets, but also has widespread macroeconomic impacts.

“The most important macroeconomic impact is the loss of confidence in the US dollar,” he said.

https://www.youtube.com/watch?v=puxcqdo30jo

He added that the signal to establish a Bitcoin reserve indicates that the weak dollar, which supports the global economy, cannot be based solely on its value to its economic strength.

This could cause a shock wave across the financial system as investors flee the dollar’s ​​assets, such as gold or Swiss francs, Rafik said.

He concluded that investors will also dump risk assets and establish a series of liquidations between financial markets, which could lead to massive collapse as the market responds to the earthquake shift in global finance.

Magazine: The U.S. has the potential to “go forward” on Bitcoin reserves in other countries: Samson Mow