Xiao Yihang: On November 16, the Federal Reserve sold gold and bought 1 million Bitcoins?
On November 15, an ally of US President-elect Trump in the US Senate proposed a plan to fill the Bitcoin strategic reserve proposed by the president-elect without increasing the government deficit: selling part of the Federal Reserve's gold.
Republican Senator Cynthia Lummis of Wyoming plans to push the bill when the new Congress takes office next year: the bill requires the United States to purchase 1 million bitcoins, accounting for nearly 5% of the circulating tokens.
The acquisition would cost about $90 billion at current market prices, but the amount could increase if the bill passes.
As the country with the largest gold reserves in the world, the United States plans to sell gold to buy Bitcoin. This is a heavy blow to the gold market. The crypto market has received official certification. First, the U.S. Securities and Exchange Commission approved the Bitcoin ETF, and now it is using Bitcoin as a strategic reserve.
Since 2020, central banks around the world have begun to worry about the U.S. debt crisis and have sold off their holdings of U.S. debt and increased their holdings of gold, causing gold to rise sharply in the past two years and hit a historical high of $2,800. The U.S. debt problem has entered a deadlock. The United States has a fiscal deficit every year, and now paying interest has become a problem. If the trick of borrowing new money to repay old debts is to continue, it has to find another way.
If this bill is passed, the price of BTC will likely rise to $500,000 per coin. The number of Bitcoins is limited, and most of them are held in the United States, such as the Grayscale Fund and the three ETFs launched by the SEC. Once the United States holds Bitcoin, it will inevitably force other countries to increase their holdings.
The rise in gold price itself is not due to its own value, but rather to excessive money supply and inflation, and is a response to the decline in the purchasing power of money. Historically, the average annual increase in gold price has exceeded 5%, and its main performance is to resist inflation. The United States' reduction of gold holdings and increase of Bitcoin holdings may weaken gold's market share.
Global central banks are devaluing their own currencies and then hedging risks by increasing their holdings of US dollars. As the US dollar declines, the market tends to increase its holdings of gold to hedge against the risks of the US dollar. Now that gold has become a war reserve, it means that Bitcoin has become a tool to hedge risks.
It is not clear whether the US bill will be passed, but once this idea has taken off, it is only a matter of time. The US Securities and Exchange Commission has allowed the launch of two mainstream currency ETFs, Bitcoin and Ethereum, and has begun to embrace the cryptocurrency market, at least with official recognition. In addition, Trump's successful election will give the cryptocurrency market a green light.
Then, will Trump reduce his gold holdings and increase his Bitcoin holdings during his term? Let's wait and see!
From the current technical point of view, there is no suggestion to buy more Bitcoin above $90,000, whether it is spot or contract. There may be a flash crash above $90,000 at any time. Here I would rather go short than go long. Or the winning rate of shorting is not very high in recent days, and it is easy to be stopped. However, there have been several waves of 3,000-5,000U adjustments in recent days, and it is also possible to get several waves of callback profits. Today, it is given a high of 91,000 again, and there is no reason not to go short. The callback target I see is at least 83,000-80,000, and then it will be 75,000-70,000 area!
