The Wolf Den #1075 - Election Day
The Wolf Den #1075 - Election Day
Finally.
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In This Issue:
Election Day
Bitcoin Thoughts And Analysis
Legacy Markets
21Shares Compares Ethereum To Amazon
Michigan State Pension Fund Buys ETH ETF
Bernstein Makes Bold Predictions
A New Stablecoin Is Launching!
Bitcoin Will Skyrocket To $200K Regardless Of Who Becomes US President | Macro Monday
Election Day
The market is on edge, and with the race looking tight, the excitement that once filled the timeline has turned to anxiety—especially for crypto assets, which are taking a nosedive. That said, today’s intro isn’t about the election; everything that can be said has already been said for now. I’ll be back tomorrow with updates on what I’m seeing and hearing as the results roll in. Wishing the best for our country and crypto.
The Bitcoin Policy Institute (BPI), founded in 2021, has just released a 53-page report titled Digital Gold: Evaluating a Strategic Bitcoin Reserve for the United States. I’m excited to share the highlights with you. For those unfamiliar, BPI has quickly become one of the most influential non-profits driving the Bitcoin mission forward on the legal stage. I’d give them a longer introduction, but the paragraph below does far more justice than I ever could.
The purpose of the report can be summarized in one sentence: “This report examines the potential for establishing a strategic Bitcoin reserve (SBR), weighing its benefits against potential risks and implementation considerations.”
From there, the executive summary outlines “four key domains” where a Bitcoin strategic reserve “advances U.S. interests:”
To keep this engaging, I won’t go through the report line-by-line or drill down into each of those four points. Instead, I’ll share the highlights that stood out to me, along with my own thoughts. This isn’t your typical financial report—it's aimed at policymakers and regulators, so the language is straightforward and to the point, no fluff.
One of the report's key themes is the idea that a Strategic Bitcoin Reserve (SBR) could enhance the U.S.'s soft power internationally. As Bitcoin enthusiasts, we often focus on the financial aspects of monetary policy and fiat debasement, but this perspective could resonate strongly with government bodies like the State Department and National Security Council, which are generally more distanced from Bitcoin’s benefits.
The report states:
“In addition, holding significant reserves of key commodities or financial assets enhances U.S. negotiating power in international relations. For instance, in times of global energy shortages, having a robust Strategic Petroleum Reserve allows the U.S. to exert influence in energy markets, offering or withholding supply to shape geopolitical outcomes.”
“In this way, national reserves serve as both an economic safeguard and a tool for exercising soft power on the international stage, ensuring that the U.S. can maintain its global influence even in the face of unpredictable geopolitical events.”
Next, I wanted to highlight the three methods BPI suggests for how the U.S. could acquire Bitcoin, with a deep dive into one of them:
“The acquisition of Bitcoin for the SBR could occur through multiple channels, each with its own advantages and considerations.”
One method that caught my attention:
“Mining Operations: The U.S. could consider engaging in Bitcoin mining operations. This approach would serve the dual purpose of acquiring Bitcoin and supporting domestic energy infrastructure. Such operations could be designed to incentivize the development of renewable energy sources and improve the resilience of the national power grid. However, this method would require significant initial investment and ongoing operational costs and would need to be balanced against competitive distortions to the private mining industry.”
The other two strategies mentioned are “open market purchases” and “seized assets.” Personally, I’m not a fan of the seized asset approach, as it creates perverse incentives for law enforcement to target crypto entities. Mining, however, is a promising alternative to open market purchases. El Salvador has already explored this on a small scale using geothermal vents, but if the U.S. adopted a similar strategy, it could spark a massive mining race, which would benefit network decentralization and security. Trump has promised to make Bitcoin in America (a misunderstanding on his part) but has also stated that “America will become the world's undisputed Bitcoin mining powerhouse,” aligning well with this acquisition approach. If Trump wins, a government-led Bitcoin mining initiative could happen fairly soon.
Another interesting section of the report is the “Size and Accumulation Strategy,” likely to be a favorite for many.
“The size of the SBR should be substantial enough to serve its strategic purposes, but not so large as to dominate the market or create systemic risks such as a loss of confidence in the U.S. dollar system.”
“One approach could be to aim for a Bitcoin holding proportional to the U.S.’s gold reserves. However, the optimal size may depend on additional factors, including the total Bitcoin market capitalization, global adoption rates, specific policy objectives, and fiscal capacity.”
I did some quick math on this:
The U.S. currently holds 8,133.46 tons of gold.
The current price of gold per ounce is $2,743.
With 32,000 ounces in a ton, the U.S. holds a total of 260,270,720 ounces of gold.
The total value of the U.S. gold reserve is approximately $714.25 billion.
In Bitcoin terms, with Bitcoin priced at $67,500, it would take about 10.58 million BTC to match the U.S. gold reserve’s value.
This target is far higher than Senator Lummis’s proposal under the Bitcoin Purchase Program, which directs the Secretary to acquire up to 200,000 Bitcoin per year over five years, totaling 1 million Bitcoin.
Both approaches would be highly bullish, especially considering the cost of acquisition if other major countries also move to accumulate Bitcoin. That said, with most global debt denominated in USD, no other country has the same capacity to print at our scale. If the U.S. chooses to acquire Bitcoin, it has the resources to make it happen.
Now, let’s dive into the overlap between the BPI report and Senator Lummis’s Bitcoin purchase program. I’ll begin with Cynthia Lummis’s comments on stage, then break down some text from the bill itself.
“This Bitcoin is going to be transformative for this country. As President Trump just said, we are printing too much money. We are spending too much money. We printed in 22 months during COVID the same amount of money that had ever been printed in the history of the United States. Well, no more. With a strategic Bitcoin Reserve, we will have an asset that, in that period of time before 2045, can cut our debt in half. And as Michael Saylor said yesterday, if we put $3.3 million in a Bitcoin Reserve, we will eliminate the United States debt. We will be debt-free because of Bitcoin.”
Now, here’s the language directly from the report:
“An SBR, however, would provide the government with option value, i.e., the option to sell some or all of its Bitcoin and use the proceeds to pay down its debt. Moreover, if Bitcoin gains wider adoption and its value consequently increases, the price of Bitcoin in terms of dollars will rise faster than the U.S. government’s dollar-denominated debt, thereby growing the value of the government’s asset holdings.”
It’s going to take a collective effort to convince politicians that this so-called "magic internet money" deserves a spot on the balance sheet of the leader of the free world. But if we can help them see Bitcoin’s potential as the hardest money out there, I’m confident we can make it happen.
To wrap up this intro, I want to address one of the objections the BPI raises and dismantles toward the end of the report:
“An SBR would transform the U.S. government into a proprietary hedge fund, unduly risking public money and encouraging speculation.”
Now, here’s the counter to that argument:
“Reply: This concern stems from a misunderstanding of the strategic nature of the proposal. An SBR is not a tool for speculative trading or short-term gains. Rather, the reserve is designed to achieve long-term fiscal resilience and financial diversification.”
“There will likely be a market effect from the initial establishment of an SBR, but a prudent programmatic purchase and long-term commitment to holding would mitigate speculative behavior. Such a program would not be a U.S. Government ‘pump and dump.’”
Here’s another objection that reflects a fundamental misunderstanding of Bitcoin’s position in the industry:
“An SBR would prematurely pick one cryptocurrency as a ‘winner.’”
Now, here’s the counter to that argument:
“Reply: The concern that establishing an SBR would be tantamount to choosing Bitcoin as the ‘winner’ over other cryptocurrencies overlooks the unique role that Bitcoin occupies in the digital asset space.”
“Bitcoin primarily functions as a synthetic monetary asset with a fixed supply, predictable issuance schedule, and no central authority or foundation. These features make Bitcoin unique and explain why it now is held not only by individuals but also by institutional investors—pension funds, etc.”
It wouldn’t make sense for the government to buy Ethereum, Solana, or any other coin outside of Bitcoin to hold in reserve. If Ethereum eventually becomes a form of global money, it might make sense to consider it—but that’s a long way off. Choosing Bitcoin as the government’s reserve asset doesn’t diminish the value of other cryptocurrencies; Bitcoin’s primary role is to serve as hard money. Governments would be better off selecting other layer-1s for specific purposes, such as supporting smart contracts, powering decentralized applications, or enabling tokenized assets.
That wraps up what I wanted to share regarding the report.
If you haven’t voted, today is the last day—wishing the best for the U.S. and Bitcoin.
Bitcoin Thoughts And Analysis
DAILY CHART
There’s little to see here except for consolidation below all time high resistance. Let’s wait for the election to be over, then look back at the charts.
Legacy Markets
US stock futures rose slightly as voting began in a tight presidential race between Donald Trump and Kamala Harris, though investors are cautious given the potential for a prolonged vote count. Nasdaq 100 contracts gained 0.2%, with Palantir surging 13% in premarket on record profits from its AI software. The dollar held steady, while 10-year Treasury yields rose to 4.30%.
European markets saw minimal movement, with the Stoxx 600 flat amid low trading volumes. Investors are preparing for potential volatility due to the close race, with options data indicating a likely 1.8% S&P 500 move after the election. Boeing rose 2.2% as workers ended a 53-day strike. Some hedge funds are betting on a weaker dollar if Harris wins, while polling shifts, especially in Iowa, are causing leveraged funds to adjust positions.
Additional market drivers this week include the Federal Reserve’s decision on interest rates, followed by Jerome Powell’s press conference, and numerous corporate earnings reports. Key corporate highlights include Boeing’s gains after strike resolution, Palantir’s rise on AI demand, Nintendo’s lowered outlook due to Switch demand decline, and Vodafone-Three’s potential UK merger approval contingent on network upgrades.
Key events this week:
US trade, ISM Services index, Tuesday
US Presidential Election, Tuesday
Brazil rate decision, Wednesday
New Zealand unemployment, Wednesday
Poland rate decision, Wednesday
Taiwan CPI, Wednesday
Vietnam CPI, trade, industrial production, Wednesday
ECB President Christine Lagarde speaks, Wednesday
China trade, forex reserves, Thursday
Eurozone retail sales, Thursday
Mexico CPI, Thursday
Norway rate decision, Thursday
Peru rate decision, Thursday
Sweden rate decision, CPI, Thursday
UK BOE rate decision, Thursday
US Fed rate decision, initial jobless claims, productivity, Thursday
Brazil inflation, Friday
Canada employment, Friday
Chile CPI, Friday
Taiwan trade, Friday
US University of Michigan consumer sentiment, Friday
Fed Governor Michelle Bowman speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 5:29 a.m. New York time
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 was little changed
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.1% to $1.0891
The British pound rose 0.2% to $1.2983
The Japanese yen was little changed at 152.20 per dollar
Cryptocurrencies
Bitcoin rose 2.5% to $68,766.76
Ether rose 2.8% to $2,436.24
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.30%
Germany’s 10-year yield advanced two basis points to 2.42%
Britain’s 10-year yield advanced two basis points to 4.48%
Commodities
West Texas Intermediate crude rose 0.6% to $71.90 a barrel
Spot gold was little changed
21Shares Compares Ethereum To Amazon
Analysts from 21Shares gave an exclusive interview to Cointelegraph, drawing a compelling parallel between Ethereum’s early days and Amazon’s beginnings in the 1990s. Below are all the publicly shared quotes from this discussion:
“Just as Amazon evolved beyond books to redefine entire industries, Ethereum may surprise us with revolutionary use cases that we can't fully envision today.”
“Large inflows into ETH ETFs will happen only when Ethereum’s potential is understood.”
“Ethereum is complex, akin to Amazon in the 1990s — promising vast potential but less straightforward in its use cases.”
“By the end of the 1990s, Amazon employed around 7,600 people. In contrast, the Ethereum network today features over 200,000 active developers — including software engineers, researchers, and protocol designers — all contributing to its evolution.”
“Amazon has grown to employ over 1.5 million people worldwide — growth we may see paralleled in the Ethereum ecosystem.”
Michigan State Pension Fund Buys ETH ETF
I’m honestly a bit surprised to see this, given the significant gap in institutional interest between BTC and ETH ETFs. It seems that only Wisconsin and Michigan have allocated to Bitcoin ETFs within their pension funds so far. Maybe whoever’s in charge of Michigan’s investment strategy is particularly bullish on crypto, which could explain the overlap we're seeing. Eric Balchunas said the following in regards to the news: “Not only did Michigan's pension buy Ether ETFs but they bought more then they did of bitcoin ETFs, $10m vs $7m, this despite btc being up a ton and ether in the gutter. Pretty big win for ether which could use one.”
Bernstein Makes Bold Predictions
Crypto predictions are flooding the timeline with speculation on what might happen if either candidate wins. One that stood out came from Bernstein, which, like me, believes Bitcoin will thrive regardless of the outcome, though the short-term impact could vary significantly depending on who takes office.
Bernstein analysts have set a Bitcoin price target of $200,000 by the end of 2025, regardless of the U.S. election results. They cite U.S. fiscal challenges, rising debt, ongoing monetary expansion, and the anticipated success of spot Bitcoin ETFs as key drivers of demand for hard assets like Bitcoin, with this trend likely to continue no matter the political landscape.
The analysts also note that the impact of either candidate’s victory isn’t fully priced in. They predict Bitcoin could break its all-time high of nearly $74,000, reaching $80,000–$90,000 by inauguration day if Trump wins. In contrast, a Harris win could initially push Bitcoin down to around $50,000, a slight improvement from their previous forecast of $30,000–$40,000 for that scenario.
A New Stablecoin Is Launching!
A group of major crypto players, including Anchorage Digital, Galaxy Digital, Robinhood, and Kraken, is launching a new stablecoin called USDG. Issued by Paxos from Singapore, USDG is designed to comply with local regulations. Unlike traditional stablecoins like Tether and Circle’s USDC, USDG stands out by sharing yield from its U.S. Treasury-backed reserves with participating firms to encourage network growth and liquidity, with rewards customized based on each partner's contributions. DBS Bank will manage cash and custody for USDG, while partners will offer the stablecoin across the U.S. through their platforms.
From Paxos:
“USDG is a new, safe and trusted stablecoin that will accelerate the global adoption of stablecoins. It is designed to support the needs of regulated institutions that maintain higher standards of operation. USDG is available today on Ethereum and will be issued on more blockchains in the near term. Paxos is required to hold only high-quality liquid assets to back USDG – US dollar deposits, short duration US Government securities and other such cash equivalents. This ensures USDG maintains 1:1 parity with the US dollar and consumers can redeem their tokens for fiat at all times.”
Bitcoin Will Skyrocket To $200K Regardless Of Who Becomes US President | Macro Monday
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.