Author: James Butterfill, Head of Research, CoinShares Source: CoinShares Translation: Shan Oppa, Golden Finance

Us It is believed that the passage of the Bitcoin Act will have a more profound long-term impact on Bitcoin than the launch of ETFs. While ETP inflows reached a record $44.2 billion in 2024, more than four times that of any previous year, indicating the success of ETF launches, we have yet to see a significant increase in interest from institutional investors in Bitcoin as an asset class. .

Through extensive communications with institutional clients, CoinShares has observed that one of the major barriers to investing in Bitcoin is its credibility among peers. Many people worry about being ridiculed for suggesting including Bitcoin in their investment portfolios, even though many of them already hold Bitcoin in their personal accounts.

The passage and implementation of the "Bitcoin Act" will win the world's largest endorsement for Bitcoin, thereby significantly reducing the stigmatization problems faced by institutional investors. If others follow suit, this development could prompt significant asset inflows into Bitcoin in the coming years.

Exploration of Bitcoin as a strategic reserve

Many are considering incorporating Bitcoin into strategic reserves assets to diversify financial assets and hedge against economic uncertainty. Here are some noteworthy examples:

United States

•President-elect Donald Trump Trump: Signs executive order to retain existing Bitcoin reserves.

•Senator Cynthia Loomis: Introduced the "Bitcoin Act", recommending that the U.S. Treasury Department purchase up to 1 million Bitcoins within five years.

Currently, the United States is pursuing two different ways to establish a strategic Bitcoin reserve. The first, by far the most consequential and difficult, is the Bitcoin bill introduced by Senator Cynthia Lummis.

Under the bill, the United States will establish a strategic Bitcoin reserve and issue U.S. dollar-denominated bonds to purchase 1,000,000 Bitcoins, or slightly less than the total number of Bitcoins.Fully diluting 5% of the supply, purchasing an average of 200,000 Bitcoin per year over the next 5 years. The currencies will be banned from sale for the next 20 years unless they are used to pay down the U.S. Treasury debt. If passed, the Bitcoin Act would become U.S. law, meaning it would force current and future investors to act in compliance with it.

This will be a landmark event for Bitcoin and may trigger a wave of purchases of Bitcoin by countries around the world. Since the game theory of Bitcoin buying favors those willing to take the risk early, choosing not to follow the world's largest economy in adopting a potential new monetary standard would be extremely dangerous for anyone.

While the impact of this bill is huge, the likelihood of passing it may be quite slim. Getting such a proposal through Congress would be a huge challenge, and Trump may not see it as a priority worth spending scarce capital on. But the likelihood is not zero, so we recommend keeping an eye on the bill’s progress.

The second and more likely path to establishing a strategic Bitcoin reserve is a recently leaked draft executive order that directs the Treasury Department to do the following Action:

Take possession of and retain all Bitcoins currently owned by any sector of the United States.

Include Bitcoin as a new reserve asset into the Treasury's Foreign Exchange Stabilization Fund (ESF)

Use the $21 billion from the ESF to buy additional Bitcoin and store it in the ESF

The President of the United States can do so without consulting Congress as long as it does not violate the law issue executive orders as he deems necessary. Therefore, Trump can decide whether to issue this order at his own discretion. The executive order is a U.S. issue, which means that future Americans can rescind or overturn the order if they wish.

Implementing a strategic Bitcoin reserve through executive order is more likely than through legislation. Its impact will also be smaller and less forward-looking. Regardless of how it is implemented, however, the global signaling effect will be clear: Bitcoin is no longer some underground asset unsuitable for serious asset allocators, but the world’s largest major global reserve used to diversify investments. assets.

European Union

European MP Sarah Knafo calls on the EU to reject a digital euro and establish a strategic Bitcoin reserve, warning the European Central Bank against "totalitarian temptations" ”. Although her views are not widely shared within the EU, and the European Central Bank has been critical of Bitcoin and digital assets more broadly.

El Salvador

< p style="text-align: left;">President Nayib Bukele: In 2021, El Salvador became the first to adopt Bitcoin as legal tender, aiming to enhance financial inclusion and attract foreign investment.

Brazil

Congressman Eros Biondini Biondini): Introduced a bill to establish the Sovereign Strategic Bitcoin Reserve (RESBit), aiming to account for 5% of Brazil’s international reserves and used to hedge global risks

Russia.

MP Anton Tkachev: Proposes the creation of a Bitcoin reserve to deal with economic sanctions and ensure financial stability

Poland

Presidential candidate Sławomir Mentzen: Advocates the establishment of a strategic Bitcoin reserve and the implementation of crypto-friendly regulations to position Poland as a cryptocurrency haven.

Argentina

President Javier Milley Milei): An active advocate of Bitcoin who criticizes the central banking system and sees Bitcoin as a means of returning control of currency to the private sector.

Japan

Member of Parliament Satoshi Yamada: Asked about the status of global Bitcoin reserves and suggested that Japan consider converting some of its foreign exchange reserves into Bitcoin. < /p>

Canada

Pierre Poilievre: ConservativeThe party leader, who has been a prominent advocate of Bitcoin, highlighted its potential as an inflation hedge and a decentralized alternative to the traditional monetary system.

Prime Minister Justin Trudeau: Criticized Poilievre's stance on cryptocurrencies, saying promoting Bitcoin is irresponsible.

As a thought exercise, we looked at the top 20 holding gold strategic reserve assets and hypothesized that they might follow the U.S.'s lead and sell 5% of their reserves, To diversify Bitcoin.

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According to our estimates, this is equivalent to a purchase value of 1100 billion in Bitcoin, accounting for 5.5% of the total supply.

Given that Bitcoin competes directly with the US dollar, considering Bitcoin as an alternative to the US dollar may not seem reasonable at first glance. However, whether the United States likes it or not, the dollar is gradually losing its reserve currency status, raising questions about the effectiveness of the post-Bretton Woods currency. As we have been advising our clients, transitioning to the “Bitcoin Standard” would be extremely disruptive to the global economy. But in essence, this is not much different from holding gold as a strategic reserve – an approach that countries have already adopted.

Theoretically, holding diversified strategic reserve assets can help solve debt problems. It would be too simplistic to dismiss Bitcoin simply because it competes with the U.S. dollar, and we also disagree with those who claim that the U.S. dollar is not in crisis. Indeed, as we highlighted in our 2025 outlook, central banks are diversifying their reserves, with the dollar's share falling from 71% in 2000 to 59% in 2022, according to the IMF.

If the United States includes Bitcoin as a strategic reserve asset, its credibility will be greatly improved and may have a profound impact on the price of Bitcoin and the global economy. More and more people are considering Bitcoin as a strategic reserve, which shows that Bitcoin is gradually being regarded as the most stable and stable currency in the world.One of the variable assets.