Strategic Bitcoin Reserve Proposed By Alabama State Auditor

by

As a seasoned financial analyst with over two decades of experience in the global markets, I find the recent push for Strategic Bitcoin Reserves (SBR) among state and federal policymakers intriguing. Having witnessed the rise and fall of various asset classes during my career, I can’t help but be captivated by the potential long-term success of cryptocurrencies like Bitcoin.

As a cryptocurrency investor, I’ve been closely watching the recent proposal by Alabama State Auditor Andrew Sorrell to establish a Strategic Bitcoin Reserve (SBR). This idea is gaining traction among policymakers at both federal and state levels, as well as with the surge in BTC‘s price following the election of President-elect Donald Trump, who has been vocal about his pro-Bitcoin stance. I find this development quite intriguing and am eager to see how it unfolds.

1819 News reported that during an interview, Sorrell expressed his strong belief in the long-term prosperity of Bitcoin and cryptocurrencies, stating, “The argument over crypto’s success has come to a close.” He also highlighted the importance of digital assets as a means of diversifying government portfolios: “At present, crypto represents a $3 trillion asset class that governments have yet to invest in. It is also one of the fastest growing asset classes […] offering the greatest potential for value increase.

Is Alabama Next To Draft A Strategic Bitcoin Reserve Bill?

As per Sorrell’s perspective, a Stablecoin Backed Reserve (SBR) has three main objectives: diversifying the portfolio, adopting a cryptocurrency-friendly stance, and safeguarding against risks associated with currencies. He posed the question, “What if the dollar no longer serves as the world’s reserve currency? What if inflation reaches 8% once more?” Bitcoin’s worth remains unchanged regardless of the U.S. dollar‘s condition, he explained. He further added that implementing a SBR would bolster our state’s financial standing and could potentially serve as security for future debt issues.

According to Sorrell’s plan, it aligns closely with both national and federal updates. The recent increase in Bitcoin’s price by 50% since Election Day has made Trump’s proposal for a “national Bitcoin reserve” seem more feasible. Trump has had meetings with significant crypto leaders, and he has promised to retain and perhaps expand the roughly 207,189 BTC that the U.S. government has confiscated over the years. This stash now accounts for over 1% of the global Bitcoin supply.

In the U.S Senate, Senator Cynthia Lummis from Wyoming has proposed the BITCOIN Act (short for Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide). This act aims to mandate the United States Treasury to establish a strategic Bitcoin reserve.

At the state level, there’s an increasing push for action. Florida is considering establishing its own State-Backed Bitcoin (SBR) as soon as Q1 2025. The Florida Blockchain Business Association (FBBA) has put forth a plan to invest one percent of the state’s pension fund, approximately $1.85 billion, into Bitcoin. Pennsylvania initiated its SBR Act in November, which could allocate up to 10% of its General Fund into digital assets. Now, there are signs that Alabama might follow suit, potentially sparking competition between states to secure early and significant Bitcoin holdings.

According to Sorrell’s statement, states may encounter fewer regulatory obstacles when buying Bitcoin compared to past years, especially after the US Securities and Exchange Commission approved exchange-traded funds (ETFs). In simpler terms, he suggests that states can invest in Cryptocurrency as effortlessly as they would buy stocks through a conventional brokerage account.

Additionally, he proposed that Alabama’s Secure Bitcoin Reserve could mimic the federal strategy announced by President-elect Trump. “We might structure Alabama’s Bitcoin holdings similar to the federal US Strategic Bitcoin Reserve which Donald Trump intends to establish,” he elaborated. “The U.S. government currently owns approximately 207,189 Bitcoins, obtained through various seizures… valuing around $20 billion. Trump has vowed to retain these and potentially increase the holdings.

Although he was eager, Sorrell suggested being careful with implementation. He proposed a two-year dollar-cost-averaging strategy as a precaution against timing uncertainties, considering the highly volatile character of the asset, especially since its price has just gone over $100,000.

According to Sorrell, instead of investing a large sum at once, it would be more advisable to invest gradually over a span of two years using a method called dollar-cost-averaging. Given that Bitcoin has just surpassed $100,000, entering the market during a bull rally might not be ideal timing. A more strategic approach is making monthly investments for a period of 24 months, which will help even out your purchase price.

Similar to Eric Trump at the Bitcoin MENA Conference, Sorrell expressed a striking projection: “The vision is for a Bitcoin reserve… rather than aiming to sell it for immediate gains,” Sorrell stressed, highlighting the significance of a strategic, long-term approach. “It’s very plausible that Bitcoin could someday reach $1 million per coin. Those who have been successful in Bitcoin investment are typically those who have purchased and held onto it for an extended period.

At press time, BTC traded at $97,607.

Read More

2024-12-11 15:42