The so-called value should be the code that pulses on the blockchain, not a signature on an executive order from the White House.
Author: YBB Capital Researcher Zeke
Preface
On March 6, local time in the United States, after President Trump signed an executive order to officially establish a strategic Bitcoin reserve for the United States, David Sachs, the White House cryptocurrency affairs director, further clarified the reserve details on social platform X: approximately 200,000 Bitcoins held by the federal government will all be allocated to this strategic reserve. These assets come from criminal or civil forfeiture procedures and are explicitly stated to be "neither sold externally nor will new coins be acquired through the market."
In a previous article published on March 4, I speculated on some follow-up situations regarding the strategic reserve. Coincidentally, the current situation aligns closely with some of the predictions made at that time. Trump did not include altcoins like SOL and XRP in the reserve list as previously promised, nor did he inject new fiscal funds into the BTC strategic reserve; he merely allocated all currently seized Bitcoins into the strategic reserve. What surprised me was the surprisingly quick implementation of the strategic reserve; Trump did not hold back this "trump card" for long. With this card played, the market's fantasy of government buying up assets was shattered, and BTC also retraced to around 77,000. Now, from any perspective, it seems that the cards Trump can play are few, but it is worth pondering whether this "crypto president," who has navigated both business and politics for decades, has a strategic layout limited to this?
1. Gold, Oil, BTC?
The collapse of the Bretton Woods system, the cracks in the petrodollar, and the rise of Bitcoin are essentially the adaptive evolution of the dollar as the anchoring asset changes with the times.
The establishment of the Bretton Woods system in 1944 marked the dollar's binding to gold ($35/ounce), becoming the "ultimate anchor point" of the global monetary system. The core logic of this design is that the physical scarcity of gold underpins the credit of the dollar, while the network effect of the dollar amplifies the liquidity of gold. However, the outbreak of the Triffin dilemma revealed the system's fatal flaw—global trade expansion requires the outflow of dollars (U.S. trade deficit), while the maintenance of dollar credit relies on U.S. surpluses and sufficient gold reserves. In 1971, Nixon announced the decoupling of the dollar from gold, allowing the U.S. to break free from the gold shackles for the sake of maintaining its hegemony. It has been proven that any currency system rigidly bound to physical resources will eventually collapse due to the irreconcilability of resource scarcity and economic expansion. The end of the gold dollar forced the U.S. to seek a more flexible vehicle.
The first oil crisis in 1973 provided Nixon with an answer: the importance of oil to modern industry is self-evident. A year later, in July, newly appointed U.S. Treasury Secretary William Simon and his deputy Gerry Parsky rushed to Saudi Arabia, the world's largest oil producer, to sign the "Irrevocable Agreement," breaking the deadlock after the collapse of the gold system: the U.S. promised to provide comprehensive military protection and security guarantees to Saudi Arabia, which agreed to price all oil exports in dollars and direct the excess oil revenue to purchase U.S. Treasury bonds, thus exchanging military protection for the acceptance of the petrodollar as the sole pricing currency for oil transactions by Saudi Arabia and other oil-producing countries. This marked the entry into the 2.0 era—oil replaced gold as the new anchor point of dollar credit, and the petrodollar system formed a closed loop through "oil trade—dollar repatriation—Treasury bond purchases." Wall Street then packaged these petrodollar debts into derivatives (with a scale of $610 trillion in 2023), diluting credit risk through "debt monetization."
The essence of this cyclical logic is that the U.S. levies a "seigniorage tax" on the world through oil trade, but now the U.S. fiscal deficit is extremely high (7% of GDP), and the total debt has already surpassed $36 trillion this year, with the entire system having evolved into a Ponzi scheme of borrowing new to pay old. As the de-dollarization of oil trade gradually expands, this cycle will begin to collapse due to the lack of anchoring assets. So what comes next? Who will fill the next fifty years after oil?
Trump currently holds two swords: Nvidia and Bitcoin. In the high-tech narrative of AI, Nvidia plays almost the role of the "digital Middle East," where everyone needs computing power, but only I can produce it. However, it is unfortunate that a certain Eastern power has found a path where AI computing power demand can also be small and beautiful, so at least before the full arrival of the AI Agent era, computing power and digital oil cannot be equated completely. (Or some countries can be self-sufficient in oil.)
Now let's look at the other sword, Bitcoin. The idea of using Bitcoin as a strategic reserve originated from Senator Lummis's proposal submitted to Congress last year, with the supporting logic being that the purchasing power of the dollar has been declining in recent years, while Bitcoin's annual growth rate has reached 55%, making its excellent anti-inflation properties a new type of value storage tool to replace gold. Trump has even said, "Give them a little cryptocurrency check. Give them some Bitcoin, and then wipe out our $35 trillion." Whether pegging to the dollar or repaying U.S. debt, I have consistently opposed these ideas in my previous articles. The first point has already been mentioned regarding the collapse of the Bretton Woods system; Bitcoin, as a digital currency with a cap of 21 million coins, has a scarcity that far exceeds that of gold, and the U.S. cannot repeat the Triffin dilemma. Second, the volatility is too high and the reserves are insufficient; with the current reserve of 200,000 Bitcoins, the asset value is less than $20 billion, accounting for only 0.056% of the scale of U.S. debt. To achieve effective anchoring, at least 30% of the circulating supply (about 6 million coins) would need to be held, or Bitcoin's value would need to be raised several times and maintained at a stable price, but clearly, neither is very realistic. Third, pegging the dollar to Bitcoin would obviously exacerbate the marginalization of the dollar; how to convert Bitcoin into a global tax base is another question.
From the current implementation of the strategic reserve, it is clear that the Trump administration cannot find a better entry point in the short term. But the speed at which this card was played makes me reconsider whether they have a bigger trump card?
Based on my personal thoughts, extending the speculation from the previous article:
The scarcity of Bitcoin does not mean that all cryptocurrencies are scarce; most public chain tokens have deflationary mechanisms. The dollar is currently based on oil, with gold as a facade. The composition of the digital Fort Knox could be mixed: BTC as gold, and ETH or SOL and other public chain tokens as oil. So, with the large-scale adoption of the "crypto capital," can a crypto American-style closed loop be formed? For example, various stablecoin projects like Usual and Tether can still promote so-called dollar settlements, and their composition mechanisms or profit sources are closely related to U.S. Treasury bonds. Does this bear some resemblance to the petrodollar system?
At the current stage, not buying or selling is reasonable, but if the trump card is limited to this, then this news should not have been announced so early. Trump is not a fool, and his crypto team behind him is even less so. There are currently rumors in the circle that the U.S. sovereign fund (which is still in the planning stage) will purchase cryptocurrencies; I actually agree that this sovereign fund is his trump card.
Once thought on a smaller scale, Trump was just opening some empty checks to the crypto circle for the benefit network behind him. But from the current situation, we may need to think on a larger scale; it is only a matter of time before mainstream countries follow suit with strategic reserves. I personally believe that BTC is the most acceptable, while the status of SOL and even XRP may be higher than that of ETH (with the advancement of adoption).
The largest unit of the crypto struggle is no longer the public chain. Trump has recently shown a clear intention to consolidate the largest CEX, public chains, and various giant projects, but how to consolidate remains a question, and how will the resistors fight back?
There are rumors on Wall Street that Trump is creating an artificial recession to pressure the Federal Reserve to cut interest rates. Whenever the market is about to improve, it will be met with a blow from Trump and Musk (the efficiency department of the government). So, does Trump also intend to suppress the crypto market? To turn top expectations into illusions first? However, I personally do not agree with this point; first, the AI bubble in the U.S. stock market does exist. Although it cannot be compared to the internet bubble of 2000, it is certainly overheated. Second, the combination of Trump and Musk is heavy-handed, which will naturally provoke external grievances, and the left's counterattack is inevitable. The so-called recession is actually a collective force.
Regarding points 1, 3, and 5, all I can do now is speculate, while I think I can slightly expand on points 2 and 4.
2. Sovereign Fund
On February 3 of this year, Trump signed an executive order directing the establishment of a U.S. sovereign wealth fund within the next year. He requested the Departments of Commerce and Treasury to submit a plan for its establishment within 90 days, including funding mechanisms, investment strategies, funding structures, and governance models. The fund's goals include funding infrastructure, supply chains, and strategic industries.
There are about 50 countries and regions globally that have sovereign funds, such as China's CIC and Huaxin, which rank second and third among the world's sovereign funds. Depending on the situation in different countries, the investment styles of sovereign funds also vary. For example, the Middle East focuses on strategic industries, Norway focuses on stock investments, and China serves private equity, real estate, and the Belt and Road Initiative. The benefits of establishing a sovereign fund for a country mainly include four points: 1. Smoothing economic fluctuations (hedging resource price risks, optimizing foreign exchange reserve management); 2. Driving economic structural transformation (for example, the tourism and technology industries supported by Middle Eastern countries); 3. Global financial discourse power; 4. Protecting society and building social welfare.
The background of the U.S. sovereign fund's establishment mainly stems from the TikTok dispute, publicly aimed at Trump buying the internet company most loved by the American people, and secondly, it can alleviate fiscal deficits and upgrade infrastructure. Privately, this is a power upgrade for Trump, allowing him to leverage his business acumen for the country while in the White House. If conditions permit, this fund will naturally become the main source of funding for the crypto strategic reserve. This situation is not entirely my imagination; the main leader of the fund, Commerce Secretary nominee Lutnick, was the CEO of Cantor Fitzgerald, one of the custodians of Tether, responsible for related asset reserves. In addition, Lutnick is also a supporter of Bitcoin, and his responsibility for planning the sovereign fund would not be surprising as it paves the way for Trump's crypto family and the interests behind him. Moreover, most sovereign funds are currently registered in offshore financial centers like the Cayman Islands and Luxembourg, utilizing local laws to exempt investment information disclosure, allowing for opaque operations. For example, the Saudi Public Investment Fund (PIF) holds 320,000 Bitcoins through offshore shell companies, completely detached from sovereign asset liability regulation. The regrets of Trump's 16-year term may be fully compensated in this term.
Regarding the sources of funding, there are only four possibilities: earn, sell, finance, and print. Based on the current situation in the United States, the first two are the most likely. Trump hopes to fill the fund through tariff revenues, while another way would be to monetize the $5.7 trillion in assets currently held by the federal government. Of course, it doesn't matter which method is ultimately used to establish the fund; we are just getting a glimpse of the ideal fund size. If this comes to fruition, there are only three main core points: 1. Government purchases will become a reality; 2. American-style crypto projects will be the main, if not the only, Alpha in the future crypto space; 3. Whether top projects accept investments from sovereign funds will be crucial for their survival.
3. Surrender?
Binance has made two significant moves this month. First, it partnered with the UAE royal family, securing an investment of up to $2 billion from the sovereign fund MGX. It is rumored that the U.S. has also discussed investment matters with Binance, and the Wall Street Journal explicitly stated that CZ allegedly exchanged equity for a pardon from the Trump family. Second, BSC has been seamlessly integrated into its own CEX, meaning that CEX users can now participate in on-chain transactions on BSC using stablecoins without any friction. These two actions reflect the issue that traditional finance and geopolitical forces have systematically co-opted crypto, and embracing centralization seems to be the only way forward for public chains. Crypto is being divided among various countries, and public chains must either choose to embrace the powerful or embed themselves within CEXs to grow strong through the allocation of traffic valves.
Ethereum, which chooses not to align with either side, still maintains its proud stance, while its exchange rate with BTC continues to create new lows. The doubts surrounding the Ethereum Foundation and Vitalik have persisted for almost a whole year. However, from my personal perspective, the survival and even counterattack of Ethereum are crucial for crypto. Today, there are only two paths: submission or resistance.
Those who submit can share in the glory with the powerful and enjoy temporary peace. But today, if five cities are cut off, tomorrow ten cities will be severed; what can a Web3 that continuously bleeds into centralization be called? One day, the seven states will return to Qin. Although Ethereum has a strange dictator, it is, in itself, the only public chain worthy of the term decentralized ecosystem. Yes, even today it is still so. I am not a loyal supporter of Ethereum, but I also do not wish for it to become the Handan City of crypto. The so-called value should be the code that pulses on the blockchain, not a signature on an executive order from the White House.
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