The Bitcoin “Arms Race” Begins

Well, here we are. One week into the new year and already one of my predictions is turning out to be right.

I wrote in recent weeks—and tweeted out the same message on Twitter/X—that I suspect the world is on the verge of what I’m labeling a Bitcoin Arms Race.

Blame Trump…

And I don’t say that negatively.

Anyone who’s read a week’s worth of my columns over the last many years will know that crypto is my passion and that at least a quarter of my net worth is tucked away into a variety of crypto projects, including bitcoin, Solana, and a wide collection of tokens trading in the Solana ecosystem. I fundamentally believe that the future of finance, education, investing, gaming, home buying, entertainment, and so much more is on the blockchain, the technology that powers the cryptoconomy.

So I’m a big fan of what Trump has planned in terms of crypto.

And one of those plans—to launch a US Bitcoin Reserve Fund holding 1 million bitcoin—is the reason for today’s dispatch.

I’ve laid out previously what this reserve fund aims to accomplish, and that if it comes to pass, it might very well help Uncle Sam pay down a tremendous amount of the debt America’s elected minions and muppets have amassed in his name.

The Bitcoin “Arms Race” between countries will come about because, as I wrote in November:

If America builds a strategic bitcoin reserve… other nations… would feel compelled (let’s call it “pressured”) to build their own bitcoin reserve. It’s not that they’d do so to compete with Uncle Sam. They’d do so to protect their own economies and currencies.

And it seems my prediction for a Bitcoin Arms Race is already taking shape, even though Trump isn’t yet in the White House and hasn’t yet officially requested Congress approve a US Bitcoin Reserve Fund.

Just the mere possibility that he might do so has already pulled the pin on this particular grenade.

To wit, some recent headlines:

The UK needs a strategic Bitcoin reserve—or risks falling behind – Business Age

Hong Kong legislator proposes adding Bitcoin to national reserves – Cointelegraph

Brazilian congressman introduces bill for national bitcoin reserve – Blockworks

Swiss central bank faces call to hold bitcoin in reserves – Reuters

Germany’s Ex-Finance Minister Urges [European Central Bank] to Adopt Bitcoin Reserves – TheNewsCrypto

Poland and Slovenia could be the next countries to create a Strategic Bitcoin Reserve – Bit2Me

We can call that trend “Sovereign FOMO”—the notion that “fear of missing out” doesn’t just afflict us mortals, it flows through governments as well.

And with good reason.

Miss out on this transformational moment in finance as a government, and your economy and your currency will fall behind as other nations race ahead.

At one point in financial history, gold was the asset every country wanted to own. Gold represented sovereign wealth, independence, and economic strength. Oil replaced gold in the 1970s, at least in terms of an asset that redefined global power and influence. Even the US dollar became known as the “petrodollar” because every country in the world at one point needed to pay for oil in dollars alone.

Gold fell out of fashion starting in the 1970s—and now the petrodollar is falling out of fashion.

Bitcoin’s fashionableness, however, is growing.

Again I’ll say, blame Trump… which is what Nigel Green, CEO of the UK’s Devere Group, did in a recent opinion piece in Business Age:

Like him or loathe him, [Trump] is pushing the US toward establishing a national Bitcoin stockpile, a move that could redefine economic strategy in the digital age. His bold stance—backed by leaders like Senator Cynthia Lummis, who’s calling for the US to acquire a million bitcoins—underscores the urgency of action.

Of course, bitcoin’s detractors (I call them economic Luddites) will have none of that. They insist (oh so incredibly wrongly) that holding a country’s reserves in an asset that bounces around with the wild elasticity of bitcoin is plainly mental. And maybe—maybe—one could have argued that case five years ago.

But if scads of countries start mopping up scads of bitcoin and stashing them away as part of their sovereign reserves, well then suddenly scads of bitcoin are no longer trading, and crazy volatility would ebb away. Bitcoin’s price will stabilize, which would lead ever more countries and companies into bitcoin because they’d see it as a relatively stable asset that preserves value relative to fiat currencies.

What I care about, however, is this: A Bitcoin Arms Race would lead to vastly higher bitcoin prices.

Countries combined would be snapping up millions of bitcoin—an asset that will only ever have 21 million coins… and estimates are that 3 to 4 million bitcoin have been lost forever in wallets held by people who have forgotten their password, as well as people who died and did not leave behind instructions on how to access their crypto wealth.

So the world really has about 17 to 18 million bitcoin. And with countries and companies gobbling them up, well, it’s not hard to see how the price of bitcoin soars into the hundreds of thousands of dollars—and then well into the millions over time.

Limited Supply, meet my friend, Excessive Demand. You two have a lot in common—you should chat.

Thus, we start 2025 with one prediction already coming true.

And if you understand what’s to come, then you’ll be buying bitcoin and adding to your stash every chance you get.

Because of this new, Trump-inspired Bitcoin Arms Race, generational wealth is incoming for those who heed my words.