Bitcoin Strategic Reserve
Bitcoin Strategic Reserve as a Concept
"There's a 65% chance of a US strategic reserve for Bitcoin and you can still buy it for under $70K." - Charles Edwards, Capriole Investments
Last week we wrote about crypto's role in (geo)politics and how Donald John Trump and Robert F. Kennedy Jr. (RFK), in particular, have been able to profile themselves as a crypto friendly candidates.
The anticipated Bitcoin 2024 Conference on Saturday clarified the crypto-related stance of both Trump and Kennedy, with RFK taking a more aggressive approach: If elected, he promised to buy 550 bitcoin units daily until U.S. reaches a reserve of four million bitcoin units. Kennedy's hypothetical reserve of four million would represent 20.27% of all bitcoin's in circulation.
Additionally, RFK proposed that the Internal Revenue Service (IRS) should issue guidance stating that transactions between bitcoin and the U.S. dollar would be unreportable and non-taxable.
Speaking after Kennedy, Trump's views largely correlated with the former, however Donald seemed to take a bit more moderate approach, announcing that he aims to build a 200,000 bitcoin unit strategic reserve. Trump also promised to make the United States the "crypto capital of the planet", and declared that the U.S. would become a "bitcoin mining powerhouse."
The stance of Trump's and Kennedy's rival Kamala Harris seems to remain neutral. However, Harris has strong ties with the traditional tech industry, having served as California’s Attorney General and developed relationships with influential figures in Silicon Valley. Recently Kamala Harris’s advisers reportedly reached out to crypto industry with "pro-business, responsible business" message.
[Presidential Candidate Profiles]
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Democrats:
Kamala Devi Harris (neutral).
Stance: Not defined, seeks a "reset" with crypto companies, possibly pro-business.
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Republicans:
Donald John Trump (positive).
Stance: Aims to build a 200K unit bitcoin strategic reserve. Promised to make the United States the "crypto capital of the planet". Declared that the U.S. would become a "bitcoin mining powerhouse."
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Independent and third-party:
Robert F. Kennedy Jr. (positive).
Stance: Aims to build a 4M unit bitcoin strategic reserve. Proposed that the Internal Revenue Service (IRS) should issue guidance stating that transactions between Bitcoin and the U.S. dollar would be unreportable and non-taxable.
Articulated a vision of Bitcoin not just as a currency but as a cyber defense mechanism capable of protecting online identities and data from cyber attacks.
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From a broader vantage point, designating bitcoin as a reserve asset would likely enhance its status as "digital gold," attracting institutional and retail investors alike. This paradigm shift could lead to a more stable and robust market, potentially driving the price higher over the long term as more investors view bitcoin as a viable asset class.
Incorporating bitcoin into the U.S. Treasury's holdings could diversify the nation's asset portfolio, reducing reliance on traditional investments like gold and foreign currencies. This diversification may appeal to investors looking for inflation hedges, further supporting bitcoin's price.
A move to make bitcoin a strategic reserve asset could prompt more favorable regulatory frameworks for cryptocurrencies in the U.S. This shift might accelerate mainstream adoption and investment in digital assets, positively influencing prices across the market.
Source: Polymarket
Polymarket's data shows how Trump has gained a substantial lead among candidates, having a 57% chance to be elected. However, Harris is also gaining new ground, rising to 39%. While the competition with the two will likely increase, Kennedy can be classified as a niche candidate.
Source: ETC Group
The U.S. presidential election is taking place amid escalating geopolitical risk. According to ETC Group, bitcoin has shown above-average returns following major geopolitical risk events in the past. ETC Group also supports a thesis of cryptoassets acting as a hedge against geopolitical risks.
Open Waters Ahead
From a purely technical perspective, bitcoin is currently building a textbook-like Wyckoff accumulation pattern, in which institutional "smart money" investors quietly accumulate at favorable prices, absorbing selling pressure from weaker market participants.
As the accumulation progresses, the spot price may break out above the trading range, signaling the end of the accumulation phase and the start of the markup phase. This breakout is accompanied by increased trading volume.
Amid July's technical correction, bitcoin's spot price almost touched its realized price (orange), trading at 31,254.77 US dollars. The realized price represents the average cost of all bitcoin purchases, indicating that the majority of bitcoin investors are significantly in profit. The confluence area between the realized price and Wyckoff accumulation structure remains as the main focal point.
Sources: Timo Oinonen, CryptoQuant
Cumulative volume delta (CVD) mirrors whale-level investor segments being increasingly active. Large $100K - $10M category orders have been in an elevated role during the past weeks.
Source: Material Indicators
Cantor Fitzgerald Launches a Bitcoin Leverage Business
American financial services firm Cantor Fitzgerald announced the launch of a bitcoin financing business on July 27, 2024. The new initiative aims to provide leverage to investors who own bitcoin, marking a significant step in the firm's increasing involvement in the digital assets sector.
The company plans to start with an initial financing pool of $2 billion, which will be allocated to support lending activities for bitcoin holders. CEO Howard Lutnick made the announcement at the Bitcoin 2024 conference in Nashville, Tennessee, emphasizing the firm's commitment to integrating bitcoin into traditional financial markets.
The new business will partner with select bitcoin custodians, although specific partners and a timeline for the launch have not been disclosed. Lutnick expressed enthusiasm about helping to unlock bitcoin's potential and bridging the gap between conventional finance and digital assets.
Return of Kimchi Premium?
While far from its 10 percent highs of March and April, the South Korean kimchi premium might be approaching an inflection point, reflecting a sentiment shift among retail investors.
Source: CryptoQuant
The kimchi premium indicator tracks a phenomenon where the spot price is notably higher on South Korean cryptocurrency exchanges compared to global average prices. This premium emerged primarily due to the high demand for bitcoin in South Korea coupled with regulatory restrictions and limited arbitrage opportunities.
