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On March 7, White House cryptocurrency director David Sacks revealed that Trump has signed an executive order aimed at establishing a strategic Bitcoin reserve and digital asset reserve library.This long-awaited milestone positive for the market has finally come true.However, once the news was announced, Bitcoin collapsed quickly, with a sharp drop of more than 6% during the session, showing a typical “good news” trend.
The reason why the market chooses to “vote with its feet” is because the main source of Bitcoin reserves is not the special fiscal plan (issuance of bonds) or fiscal appropriations expected by the market, but Bitcoin through criminal and civil confiscation, as well as other Bitcoins obtained based on neutral budgets.This result has made the expectation that the government, which had previously been the most popular, would go directly to buy goods.Therefore, the decline is essentially a correction to the market’s excessive expectations.
The most eye-catching highlight of the executive order for Bitcoin Strategic Reserves signed by Trump is that the order requires the Ministry of Commerce and the Ministry of Finance to explore more ways to obtain Bitcoin based on neutral budgets.The so-called neutral budget means that this operation does not involve new expenditures or deficit financing.As a result, asset swaps—that is, changing the portfolio of assets in government reserves and funds—is generally considered the way to operate the most.For example, swap assets in the digital reserves into Bitcoin; swap some gold reserves into Bitcoin; or swap some foreign exchange reserves in the Forex Stable Fund into Bitcoin.However, under the federal legal framework, only the first method is operable, because managing the forfeited assets is within the purview of the Treasury Department, while other operations involve modifications to existing bills or the introduction of new bills, requiring approval from Congress.It is worth noting that the FederationThe assets in the digital reserve library are only US$500 million, and the scale of replacement is very limited.
In fact, Trump’s launch of Bitcoin strategic reserves has fully utilized the maximum effect of the president’s power.As David Sacks said, at this stage their focus is not on how to accumulate Bitcoin, but on how to prevent the sale of 200,000 Bitcoins to avoid losses in the country (the sale of Bitcoin in the past has caused the country to lose billions of dollars).In other words, Trump first establishes a prototype of Bitcoin strategic reserves, and then improves the corresponding legal support (promoting the implementation of the corresponding bill) and strives for more incremental sources.Many people think Trump’s plan is lower than expected because they overestimated the power of the US president from the beginning.
Although it is still unknown whether the support bill supporting Bitcoin strategic reserves can be successfully passed, Trump’s Bitcoin strategic reserves will still bring two long-term benefits to the market: First, during Trump’s term, the market does not need to worry about the impact of the US government’s selling of Bitcoin on the market; Second, the establishment of the World Bitcoin strategic reserves will have a huge demonstration effect.In short, except for a few countries such as the United States and El Salvador, other countries still have gaps in Bitcoin reserves. Once these countries follow the example of the United States, the potential incremental scale will be very considerable.At the same time, based on the ratio of gold to Bitcoin’s market value of 10:1, the theoretical allocation ratio of global sovereign wealth funds and pensions to Bitcoin can reach 0.1%-0.2% (1%-2%), that is, 67 billion to 134 billion US dollars.
DOGE, the government efficiency department led by Musk, has achieved remarkable results, driving 62,000 employees to lay off 17 government agencies, a year-on-year increase of 41,000%.Meanwhile, more than 1,000 unreasonable government spending were cancelled.They have saved the government $100 billion by cutting funding and laying off employees, according to data released by DOGE.However, Bloomberg statistics show that the amount of contracts involved in the specific project of savings announced by DOGE website is actually only $8.6 billion.It is worth noting that on March 7, Trump took back most of his decision-making power due to his excessively radical work, which also means that the work of reducing the deficit has encountered great resistance.
Compared with layoffs, the effect of lowering interest rates is more significant.According to Lehman Brothers founder Larry McDonald, the government can save $400 billion in interest expenses for every 1% reduction in interest rates.This is also the reason why Trump and Treasury Secretary Becent has been calling on the Fed to cut interest rates.However, this proposal was rejected by Powell without exception as “immature time”.Therefore, the turmoil in U.S. stocks since late February is considered the result of a fierce game between the two sides.As long as Powell does not compromise on interest rate policies, the pressure on artificial non-agricultural markets will continue to impact.As long as Powell does not compromise on interest rate policies, the U.S. artificial non-farm pressure will continue to impact the market.Therefore, whether the market can reverse the decline in the future depends on whether the Federal Reserve cuts interest rates early or ends the balance sheet reduction.
Before this, the market’s trend of bottoming out will continue for some time.Stay patient!
In the operation of altcoins, what type of trading opportunities investors focus on mainly depends on individual risk preferences and profit expectations.For stable investors, I think the platform coins of leading exchanges still have a certain margin of safety, after all, the current valuation and growth potential are still very good.ETH, which is relatively behind in this round of upswing, can also be considered. After all, the unblocking of ETH staking and the launch of hybrid encryption ETFs can still bring a lot of incremental growth.
