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In recent research report, broker Bernstein highlighted that the U.S. crypto task force will focus on the launch a national bitcoin reserve, a move that could spark similar initiatives around the globe.
“A creation of a U.S. bitcoin reserve could lead to a global race amongst sovereigns to buy bitcoin as one of the reserve assets,” analysts led by Gautam Chhugani noted. Notably, The report highlights several key questions about the creation of a strategic reserve.
Analysts believe that the current Bitcoin bull market began in late 2023, fueled by the growing possibility of spot Bitcoin ETF approvals in the U.S. Strong ETF inflows boosted Bitcoin to an all-time high of $74,000 before a brief pause. The market gained another boost after pro-crypto Donald Trump’s November election win, with promises to make the U.S. the “crypto capital of the world” and create a national Bitcoin reserve. This saw Bitcoin hit $109,000 on Inauguration Day.
According to analysts led by Gautam Chhugani, the next phase of the Bitcoin bull market is set to kick off, driven by several positive catalysts. The asset manager has advised investors to position themselves for the next phase of the bull market across bitcoin and bitcoin linked equities.
Fed To Sell Gold To Fund BTC Purchases?
The report also raised key questions about whether the U.S. Federal Reserve or the Treasury would take on the task of buying bitcoin. If the Fed is involved, it would need approval from lawmakers. It also explores how the Fed would fund such a move, with Bernstein suggesting the Fed could either issue debt or sell some of its gold reserves to finance cryptocurrency purchases.
Furthermore, the report also suggests that the U.S. government could include the $20 billion in bitcoin seized from criminal enterprises to any national reserve.
Recently, the Trump administration has also revealed plans to create a sovereign wealth fund (SWF), Bernstein remarked that such a fund would view key U.S. crypto companies and market leaders as strategic assets worth investing.
Key Catalysts For The Bull Run
Further, analysts also highlighted recent SEC 13F filings as key catalysts for the next Bitcoin bull run. Mubadala, an Abu Dhabi sovereign wealth fund, invested $437 million in spot Bitcoin ETFs, while Goldman Sachs, Barclays, and Paul Tudor Jones’ firm also increased their Bitcoin holdings.
Bernstein also highlighted Strategy’s $742 million Bitcoin purchase, strong ETF inflows, and the SEC’s repeal of SAB 121 allowing crypto custody by banks as the major drivers.
The Bitcoin Reserve Race Heats Up!
The race for a U.S. Bitcoin reserve is heating up, with 21 states now proposing bills to invest public funds in BTC. States like Arizona, Texas, Illinois, and Utah are already taking steps to add Bitcoin to their treasuries. According to VanEck, if these bills pass, it could drive up to $23 billion in demand for BTC.