GuShiio.com Author: Alex Xu
This issue only focuses on the progress of the Bitcoin Reserve Act in the United States.
The Bitcoin Reserve Act is currently being promoted at two levels: the Bitcoin Reserve Act of the US state government and the Bitcoin Reserve Act of the US federal government.
About 25 states have proposed the Bitcoin Reserve Act, half of the total, while the federal reserve bill was ready last year and is now preparing for hearings.
The entry of BTC into the asset reserve list of big governments through the Bitcoin Reserve Act is one of the main narratives of the long-term bullish BTC in this round of markets, which will not only introduce purchase funds from the US government, but also have an exemplary effect on reserve decisions of other countries.
For example, the governor of the Czech central bank said earlier that he was considering adding BTC to the national reserve. Last year, Japanese Prime Minister Ishiba Shigeru wrote back to Sen. Satoshi Hamada, who advised Japan to evaluate Bitcoin national reserves at that time, saying that he would not consider storing Bitcoin for the time being. one of the reasons is that ldquo; US Bitcoin reserves are only in the discussion stage & rdquo;.
If there is a breakthrough in the Bitcoin Reserve Act in the United States, it will undoubtedly affect the potential decisions of other countries, investment institutions and sovereign funds.
So how is the Bitcoin Reserve Act going in the United States?
Judging from the current situation, I don’t think it is optimistic.
At the state level, of the states that have proposed bitcoin reserve bills, four have been rejected or rejected: Montana, North Dakota, South Dakota and Ohio. In addition, Senator Mike Cabell, who introduced the Bitcoin Reserve Act in Pennsylvania in November, lost his seat in the election shortly after introducing the bill, meaning there will be no progress on the state’s Bitcoin bill (unless someone else resubmits it).
More significantly, the four states in which the reserve bill was rejected (Montana, North Dakota, South Dakota and Ohio) are all Republican-controlled red states. Ohio, which is home to Senator Cythia Lummis, the current sponsor of the national bitcoin reserve bill, has been friendly to the encryption industry, including mining, cryptographic payments, pledges, and stable coins.
Specifically, the bitcoin reserve bill has been blocked differently in four states. Normally, for the Bitcoin Reserve Act to be formally passed, apart from the early preparatory stage, it will take three steps:
1. A small-scale review and vote of a House special committee, and after it is passed, the whole House of Representatives votes (and some states vote first in the Senate)
two。 A small-scale review and vote of the Senate special committee, and after it is passed, the whole Senate will vote.
3. The Chief Executive (Governor or President) signs the bill into force.
Among them, Montana and North Dakota entered the House vote and were rejected, while Ohio and South Dakota were rejected in the special committee session, not even the formal parliamentary vote.
As for the reasons for the veto, I think Patrick Fleming, a member of the Ohio special committee and chief investment officer of the state Treasury, is representative and a supporter of cryptocurrencies himself. He explained that he voted against the committee: & ldquo; has been one of the best investments for the past 10 years. It’s a leap. But when you look at its volatility, for example, in 2021, it’s down 77%, which is something we don’t want to be in the portfolio. & rdquo
In other words, as an individual investor, Patrick Fleming believes in bitcoin, but as the investment officer of the state government, BTC is still too volatile to be used as an investment target for state finance.
It is conceivable that it is difficult to pass the Bitcoin Reserve Act in states dominated by highly pro-encryption Republicans, and it is even harder to pass the National Bitcoin Reserve Act at the level of the federal government, where Congress is more balanced and the game is more complex.
And if the bitcoin reserve bill is heavily vetoed at the state level, state lawmakers’ decisions are bound to affect the minds of federal lawmakers and shake congressmen who were originally considering supporting the national reserve bill.
It can only be said that Bitcoin’s entry into big governments is not as smooth as many in the encryption industry expected. VanEck, a well-known encryption investor, predicted that bitcoin reserve laws in more than 20 states would bring more than $20 billion to BTC.
VanEck analyst’s analysis of the purchasing power of state reserves, source: @ matthew_sigel
At present, this forecast is obviously somewhat optimistic, not only whether these states will start buying soon after passing the bill, but also how many states will pass the bill in the end.
So is the Bitcoin Reserve Act, the biggest carrot of the BTC bull market, going to smell bad? Is the bull run of BTC going to be hopeless?
Maybe not.
Although four states + Pennsylvania bitcoin reserve laws have been blocked, some states are making good progress. In Utah, for example, the bill has been voted not only by a special committee, but also by a House of Representatives and a Senate committee. In addition, the reserve proposals in Arizona and Oklahoma have also passed the vote of the House of Representatives special committee, which is about to enter the House of Representatives voting session, in which the Oklahoma vote is no accident, and the results will be seen soon in recent days.
If subsequent bills in Utah, Oklahoma, Arizona and other states proceed smoothly, or even legislate successfully, it will undoubtedly boost the confidence of other legislators, including those in the United States and other countries.
Moreover, even without considering the passage of the US National Bitcoin Reserve Act, the fundamental improvement of BTC in this cycle is significantly better than that of the previous round, which is lacklustre in the last round, and the only thing that may impress people is Tesla’s purchase of BTC (which was subsequently reduced) and the narrative of the so-called ldquo; institution Changniu & rdquo; brought up by grayscale trust. On the other hand, the improvement in the fundamentals of BTC is much greater, which is reflected in:
& middot; Bitcoin spot ETF has been approved to become the fastest growing ETF product in history
& middot; Bitcoin enters the balance sheet of a large number of listed companies and investment institutions, and according to the new accounting standards that came into effect in January 25, BTC can be priced at fair value in its financial statements, changing the previous holding of BTC, but the increase in investment cannot be reflected in the financial statements after the price increase.
& middot; sovereign fund began to buy BTC and Abu Dhabi sovereign fund, the second largest under management in the world, officially disclosed its BTC position.
& middot; has the most encryption-friendly government team and regulatory agencies in history, and of course I’m talking about the United States.
In addition, with all kinds of narratives and racing tracks such as DeFi, L1, Gamefi, NFT, Meme and so on, there is a lot of public opinion & ldquo;ETH flip BTC&rdquo. As a result, the attention and capital of BTC are seriously diverted. Other tracks in this cycle are dull. BTC is almost the only encrypted asset whose fundamentals have improved significantly. Funds and attention are highly focused on BTC, which has also created a magical scene in which BTC market share has continued to rise for a long time since this bull market.
The trend of bitcoin market share since the middle of 22 years, source: Tradingview
Under the circumstances that the fundamentals and comparative advantages of this round of BTC are significantly better than those of the previous round, the highest point of this round of BTC (109000) is only 58% higher than the highest price of the previous round (69000), while the highest price of the last round is 245% compared with the peak price of the 17-year cycle (20000).
Of course, with the growth of BTC’s market capitalization, it is almost an inevitable trend to reduce the increase of each cycle, but with reference to the basic situation of the two rounds of BTC, is it really only 58% of the cyclical increase of this round of BTC?
In the face of the same facts and data, everyone has different views.
Next, with regard to the BTC Reserve Act, I will follow specific developments in several key states, including Utah (the Senate vote is expected in March, if it goes well to become the first state to pass BTC reserve legislation), Oklahoma (House votes will be available in the next few days), Arizona, Texas, and so on.
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