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When the zone is full of FOMOs, a week can feel like eternity. Last Sunday, Donald Trump tweeted:
US crypto-protective sanctuaries will boost this important industry after years of corrupt attacks by the Biden administration. So my executive order on digital assets directed the Presidential Working Group to proceed with preparation of crypto strategy, including XRP, SOL and ADA. We confirm that the United States is the crypto capital of the world. We’re making America great again!
It was a big signal for the crypto world, but not because of what it said, but because it implied. The Ministry of Finance holds XRP, SOL and ADA tokens literally zero. Therefore, the Crypto Strategic Reserve had to be cashed-out bughorders approved by the Congress of Last Response. You will buy tokens at the open market.
However, the words in the tweet were not true.
According to FactSheet, which accompanied the executive order signed by POTUS yesterday, there are strategic Bitcoin reserves and digital asset stockpiles for other tokens. To build the funds, the Treasury will receive a token “confiscated as part of a criminal or civil property forfeiture procedure.”
Bitcoin will be held forever as it will “maintain as a store of reserve assets.” Altcoins (meaning Ethereum) and cannot be sold by XRP, Sol or Ada in the future, but cannot be purchased.
Ethereum has been slowly decreasing this morning after losing its spare asset status within a week.
Ether dollar price
. . . The XRP, SOL and ADA trade was already similar to pumps and dumps, but Sunday’s tweet spikes disappeared by half of Monday.
XRP Sol
According to Arkham Intelligence Data, the US government holds seized Bitcoin at a spot price of over $18 billion. The stockpile of altcoins, memocoins and shit in the state appears to be much smaller. There is millions of dollars of ether and not much else.
And because people think it’s funny to send shit to government wallets, America holds more poop, baby tramps and colons than the three tokens of tokens previously identified as the country’s strategic assets.
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(Mainft’s Phil Stafford has a great summary of what these tickers mean.)
In reality, there was little chance of the Ministry of Finance’s reserves, including new purchases of private pseudo-equity. Bitcoin may be traded like a triple-utilized Nasdaq ETF, but in the hearts of loyal people, “digital gold” is sacred. Altcoins such as XRP, SOL, and ADA are very similar to community currencies. They are running through the unregulated white world fundraising mechanism for startups that don’t exist yet. Resisting centralization and government control is the overall mission of the founder. Pump-and-dump suspicion aside, the traders probably hit all of this pretty quickly.
So, after a short distraction, we are back to Bitcoin maximalism.
As Mainft’s Brendan Greely said in November, the main point of the US Strategic Fund is to paste so many codes into the Treasury Department, and the restrictive measure is that it will be self-vulnerable. A side benefit is to remove the overhang that has been around since 2013 when the US forfeited Bitcoin from Ross “Dread Pirates Roberts” Ulbriccht, founder of the Silk Road Dark Web Marketplace. (Trump forgives Ulbriccht in January.)
Nevertheless, yesterday’s order shows in vague terms that as long as the Treasury is “budget neutral,” it may be possible to make a new purchase of the strategic reserve.
Subject to these strategies not imposing incremental costs on US taxpayers, the Treasury and commercial secretaries are permitted to develop budget-neutral strategies to acquire additional Bitcoin.
This is a distant echo of the bill proposed last July by US Sen. Cynthia Ramis, where the Treasury purchased 1 million Bitcoin using accounting profits from the market to the market with bank’s gold certificates, giving a non-existent refund.
Toby Nangle made a detailed laceration against Lumis’ FTAV in November, and concluded that while the bill is nonsense, there may still be enough laws to allow Bitcoin purchases using the Exchange Stabilization Fund. And while perhaps ESF may be reduced for Bitcoin plunge protection in response to crashes, daily purchases are virtually impossible to do with any efficiency.
Bitcoin’s liquidity is getting worse. Last year’s Bitcoin ETF launch moved around $400 billion to cold storage custody accounts, but Micheal Saylor’s MicroStrategy holds an additional $45 billion that he says is not lending. Wash trading probably inflates the daily volume of Bitcoin trading, but the speed (a measure of market activity per token) is as low as in 2012 when token costs around $10.
The market liquidity is very poor and is of great importance for a new $40 million supply. The total power of publicly available mining companies may mint 100 of the 450 new Bitcoins produced per day, but there is no liquidity added either.
Mara (formerly Marathon Digital) reported a stockpile of 46,734 bitcoin at the end of February, and last year funded new purchases with the issuance of a micro-strategy style of conversion memos. Riot Platforms says it will make a “strategic purchase” to add it to its Bitcoin stockpile, which was standing at 18,692 Bitcoins at the end of February. Core Scientific did not reveal the number of mined Bitcoins it sold in February, but it was not sold in January.
When it comes to matching Bitcoin buyers with marginal sellers, we probably need to look even further, in places with low electricity and low dollars, such as in the territory of Iran and Russia’s frontiers. Does the US really want to make crypto purchases at open markets where sources are uncertain?
The Bitcoin Strategic Reserve proposal currently standing will move another 200,000 tokens from temporary to permanent deep freezes. If only the 19.7mn bitcoin slivers that exist are actively circulating, the formal removal of overhangs can probably be considered positive for the price of Bitcoin.
Meanwhile, the stockpile plan creates overhangs on all other tokens, from Ethereum to Poop Coins. Compared to last year’s US talk, they founded a crypto SWF that can pay back national debt, but it looks like bait and switch.
