\n<\/p>\n
Crypto bros are hoping that Donald Trump\u2019s second term will continue to boost the\u00a0BTC\u00a0token\u2019s fiat value, while others fear that Trump\u2019s desire for a strong U.S. dollar could undermine the dollar\u2019s status as the world\u2019s reserve currency.<\/p>\n
While last month\u2019s re-election of Trump to a second term as U.S. president\u00a0added significant fiat value\u00a0to the BTC token, many crypto bros won\u2019t be satisfied until Trump makes good on\u00a0his vow in July\u00a0to\u00a0establish a \u201cstrategic national (BTC) stockpile.\u201d\u00a0Trump said the \u2018core\u2019 of this stockpile would be the 210,000 BTC tokens seized by the federal government over the years, supplemented by additional BTC the government \u201cacquires into the future\u201d (by unspecified methods).<\/p>\n
The \u2019core\u2019 of that plan could be in jeopardy following\u00a0reports\u00a0of movement by a digital wallet containing nearly 20,000 BTC tokens\u00a0seized by the feds\u00a0a few years ago from an individual linked to the\u00a0Silk Road\u00a0darknet marketplace. The nearly $2 billion worth of BTC was transferred to the\u00a0Coinbase\u00a0(NASDAQ: COIN)\u00a0exchange, suggesting that the feds are either planning to sell or have already sold these tokens to take advantage of BTC\u2019s recent price pump.<\/p>\n
While the report appears to have contributed to a modest 1% decline in BTC\u2019s price, crypto bros fear a much greater decline should outgoing President Joe Biden order a fire sale of the government\u2019s other 190,000 BTC. Conspiracy theorists also suspect that this is Biden giving a giant middle finger to Trump\u2019s \u2018stockpile\u2019 plan.<\/p>\n
Amid fears that Trump\u2019s \u2018stockpile\u2019 plan could be undone should the BTC cupboard be bare by the time he\u2019s sworn into office on January 20, federal politicians like Sen. Cynthia Lummis (R-WY) want the government to simply\u00a0buy 5% of the total 21 million BTC supply. This would be funded by the government selling off its gold reserves, but it\u2019s unclear how the\u00a0gold-loving Trump\u00a0feels about this idea.<\/p>\n
(Side note: Federal Reserve chair Jerome Powell\u00a0said\u00a0Wednesday that BTC was \u201ca speculative asset\u201d but \u201cnot a competitor for the dollar; it\u2019s really a competitor for gold.\u201d BTC crossed the magical $100,000 barrier shortly thereafter. Read into that what you will.)<\/p>\n
We\u2019ll leave the question of whether relying on a token with a history of rollercoaster value rides is\u00a0a really, really bad idea\u00a0for another day. A much bigger question is what impact Trump\u2019s financial policies\u2014including his promises\/threats to impose massive tariffs on America\u2019s trading partners\u2014will have on the U.S. dollar, including a potential move away from viewing the dollar as the world\u2019s reserve currency.<\/p>\n
Throwing BRICS through windows<\/strong><\/p>\n During his first term, Trump imposed steep tariffs against countries he perceived to be abusing fair trade rules. Tariffs were also imposed as leverage to convince foreign governments to acquiesce on other areas of policy Trump was trying to implement.<\/p>\n During the 2024 election campaign, Trump called tariff\u00a0\u201cthe most beautiful word\u201d\u00a0in the dictionary, based on his belief that tariffs repatriate jobs\/businesses that left the U.S. long ago in search of cheaper labor, looser regulations, etc. Economists are dubious about Trump\u2019s view of tariffs as an economic cure-all, noting that the costs are largely borne by average consumers who can no longer access inexpensive products and that retaliatory tariffs will act as a drag on the global economy as a whole.<\/p>\n Trump has already vowed to impose new 25% tariffs on Canada and Mexico, plus 10% tariffs on products from China if these nations don\u2019t kowtow to his policy wishes. But he recently went nuclear on the so-called\u00a0BRICS\u00a0nations,\u00a0threatening them with 100% tariffs\u00a0if they proceed with plans to issue a common currency to replace the dollar as the common denominator of international trade.<\/p>\n BRICS (Brazil, Russia, India, China, and South Africa) has been on an expansionist tear of late, inviting six additional countries to join the club in 2023, and invitations went out to a further 13 countries this October. This expanded body would represent around\u00a045% of the global population and 35% of global GDP.<\/p>\n Brazil, Russia, and Iran, in particular, have been pressing for the launch of\u00a0a BRICS common currency, in part to neuter America\u2019s ability to impose economic sanctions on countries\/individuals\/entities Uncle Sam doesn\u2019t like. So far, these efforts have\u00a0failed to garner universal support\u00a0among BRICS members (but that hasn\u2019t stopped some Chinese \u2018crypto\u2019 cowboys from\u00a0trying to pass off a bogus \u2018BRICS Pay\u2019 system\u00a0as an alternative to\u00a0the global SWIFT network).<\/p>\n Trump\u2019s BRICS threat was anything but subtle, saying America wanted \u201ca commitment from these countries that they will neither create a new Brics currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy. They can go find another sucker.\u201d<\/p>\n Russia\u2019s response was equally unsubtle, with Kremlin spokesman Dmitry Peskov\u00a0warning\u00a0that the dollar \u201cis beginning to lose its appeal as a reserve currency for a number of countries.\u201d Peskov added that if the U.S. was to use \u201ceconomic force to compel countries to use the dollar it will further strengthen the trend of switching to national currencies (in international trade).\u201d<\/p>\n BTC is the new oil, stablecoins the new barrel<\/strong><\/p>\n Trump\u2019s views on the U.S. dollar have shifted over time. At one point, he claimed to want a weaker greenback to close America\u2019s trade deficit, which stood at\u00a0$773 million in 2023\u00a0(a modest improvement over 2022\u2019s nearly $1 billion deficit). But America\u2019s long-term debt is another beast entirely, currently standing at\u00a0over $35 trillion, and Trump\u2019s tariffs and plans to extend tax cuts in 2025 are expected to add trillions more.<\/p>\n Trump drew chuckles in September when he floated the idea that BTC\u2019s fiat value would grow so much under his second term that he could use the gains to\u00a0\u201cpay off\u201d the debt. As always, distinguishing Trump\u2019s jokes from his actual policies isn\u2019t easy, so who knows how seriously he believes this flawed logic.<\/p>\n Is such a move even possible? Theoretically, according to analyst Luke Gromen, who in\u00a0a recent interview\u00a0referenced Trump\u2019s claim this July that BTC is \u201cthe new oil.\u201d<\/p>\n Gromen recalled\u00a0an anecdote\u00a0by Saudi Arabia\u2019s former oil minister in 2011 regarding a pivotal moment in the early 1970s.\u00a0Gromen\u2019s interpretation\u00a0of this story is that America decided to make the global oil market \u201cbig enough to back U.S. deficits\u201d through a plan to \u201cbasically recycle the flows back into U.S. debt.\u201d This plan allegedly took America off the gold standard and put it on \u201cthe oil standard.\u201d<\/p>\n Referencing Trump\u2019s \u2018new oil\u2019 comment, Gromer suggested that BTC \u201cis going to be inflated like oil was so that it will inflate\u00a0stablecoins\u00a0so that stablecoins will buy a lot more (Treasury bills).\u201d<\/p>\n In July, Trump\u00a0declared\u00a0his intention to \u201ccreate a framework to enable the safe, responsible expansion of\u00a0stablecoins\u2026 allowing us to extend the dominance of the U.S. dollar to new frontiers all around the world.\u201d (Temporarily ignore the glaring conflict of interest of Trump\u00a0personally profiting\u00a0from a blockchain project that plans to make money by \u201csupporting US dollar-based stablecoins and\u00a0DeFi\u00a0applications that seek to preserve the US Dollar\u2019s status.\u201d)<\/p>\n This \u2018stablecoins save the dollar\u2019 view has become dogma for crypto bros, who claim that T-bill purchases by issuers of major stablecoins such as\u00a0Tether\u00a0(USDT) and\u00a0Circle\u00a0(USDC) are offering badly needed support for America\u2019s finances (despite total\u00a0T-bill holdings\u00a0by all stablecoin issuers currently amounting to 0.0035% of that $35+ trillion).<\/p>\n The thing is, on December 4,\u00a0Reuters\u00a0reported that \u201cTrump\u2019s pro-crypto stance\u201d is convincing a growing number of companies to invest spare cash in BTC rather than T-bills. D\u2019oh!<\/p>\n With friends like these\u2026<\/strong><\/p>\n Trump is famously\u00a0not much of a reader, relying instead on one-on-one conversations with people he believes know what they\u2019re talking about. There are those who suspect Trump\u2019s understanding of all things \u2018crypto\u2019 has been\u00a0tainted by individuals with ulterior motives\u00a0and will ultimately lead to a few individuals getting rich and a lot of Americans getting hosed. But it could also do damage to Trump\u2019s desire to preserve the dollar\u2019s status as the world\u2019s reserve currency.<\/p>\n Consider Elon Musk, the noted BTC and\u00a0Dogecoin\u00a0fan and, more recently, the \u2018Trump whisperer\u2019 appointed to co-lead the non-departmental\u00a0Department of Government Efficiency\u00a0(D.O.G.E.). Musk has been\u00a0a critic of America\u2019s use of economic sanctions\u00a0and the Federal Reserve\u2019s\u00a0money-printing binges\u00a0for some time, but these critiques have grown louder and more frequent as he more closely aligned himself with Trump.<\/p>\n Musk agrees with calls to\u00a0bring the Fed under the president\u2019s direct control, but economists warn that robbing the Fed of its traditional independence wouldn\u2019t inspire confidence in the markets, whether at home or abroad. Similar independence concerns are partly why the world isn\u2019t clamoring for a BRICS currency, given the involvement of China and Russia\u2019s authoritarian leaders in the policies of their respective central banks.<\/p>\n Ever since Musk bought Twitter and rebranded it as \u2018X,\u2019 he\u2019s been promising to add payment channels as part of its transformation into an \u2018everything app\u2019 like China\u2019s\u00a0WeChat. Musk has played coy with precisely what form those online payments might take, but his views on the diminishing dollar suggest the platform would focus on digital alternatives (likely including DOGE).<\/p>\n Then there\u2019s Peter Thiel, who, along with Musk, is a member of the\u00a0\u2018PayPal mafia.\u2019\u00a0In his 2014 book\u00a0Zero to One<\/u><\/em>, Thiel notes that PayPal\u2019s original goal was to \u201ccreate a new internet currency to replace the U.S. dollar \u2026 (with) a digital currency that would be controlled by individuals instead of governments.\u201d<\/p>\n In addition to his history with Musk, Thiel is largely responsible for vice-president-elect\u00a0J.D. Vance\u2019s political career. Vance is a BTC fan, declaring ownership of $250,000-$500,000 worth of BTC in his financial disclosure forms earlier this year.<\/p>\n In 2022, Thiel\u00a0gave a speech\u00a0at the BTC Miami conference during which he ripped up some hundred-dollar bills and declared that\u00a0\u201cwe are at the end of the fiat money regime.\u201d\u00a0Oh, and Thiel infamously\u00a0declared\u00a0in 2009 that \u201cI no longer believe that freedom and democracy are compatible.\u201d<\/p>\n If you still think these guys have an agenda that has your best interests at heart, you\u2019re not paying attention.<\/p>\n Careful what you wish for<\/strong><\/p>\n Thiel backed Trump in 2016 but opted against contributing to the 2024 campaign (while still supporting Vance). Thiel may come to regret that parsimonious approach should another U.S. bank in which he or his companies keep money fail, much like\u00a0Silicon Valley Bank (SVB) did in March 2023.<\/p>\n Thiel\u2019s Founders Fund venture capital group was reportedly\u00a0the cause of the bank run\u00a0that led to SVB\u2019s demise. SVB\u2019s depositors\u2014including USDC-issuer Circle\u2014were ultimately\u00a0rescued from billions in potential losses\u00a0by the big bad federal government and the American taxpayer. (You\u2019re welcome.)<\/p>\n The tech VCs expect to gain\u00a0greater access to the traditional banking system\u00a0under Trump but when\u2014not if\u2014they overextend themselves again, they shouldn\u2019t count on Trump directing the government to open its bailout wallet. In a\u00a0Fox News interview shortly after SVB\u2019s collapse, Trump said \u201cI wouldn\u2019t have supported the bailout. The bank would have to get along by itself.\u201d<\/p>\n Of course, Trump wasn\u2019t in office at the time, and his tech bro buddies might still find a way to convince him that the big strong U.S. dollar is best used pulling their butts out of fires of their own making.<\/p>\n Not for the first time, Trump appears to be pursuing conflicting goals: ensuring dollar supremacy while simultaneously boosting alternative assets that haven\u2019t been shy about their desire to replace the dollar. His tariff threats are aimed at shoring up America\u2019s finances but would push other nations to trade more with each other and less with America, which would accelerate de-dollarization faster than any BRICS buck.<\/p>\n Ironically, the sum total of Trump\u2019s policies may provide a bigger boost for BTC adoption\u00a0outside<\/em>\u00a0America. On December 4, Russian President Vladimir Putin\u00a0suggested\u00a0countries should stop holding dollar reserves because the U.S. can seize those funds at any time. Putin went as far as to suggest BTC as a legitimate alternative because \u201cwho can prohibit it? No one.\u201d<\/p>\n Watch: Bringing the Metanet to life with Teranode<\/p>\n