JAKARTA - US Senator Cynthia Lummis announced an ambitious plan to turn the Federal Reserve reserves into Bitcoin. This plan, unveiled at the Bitcoin 2024 conference, sparked heated debate among experts and market participants.
Lummis stated that the US government plans to raise up to 1 million Bitcoins in the next five years. This largest crypto asset will be kept for a minimum of two decades and used to pay off the state's debt. This decision sparked a fundamental question: is this a strategic step to protect the value of the US dollar or is it just a risky speculation?
Diversification Or Gambling?
Gabor Gurbacs, a former VanEck adviser, provided arguments in favor of Fed's move. According to him, Bitcoin acquisition is part of an asset diversification strategy, similar to the gold role in central bank reserves. With a limited supply, Bitcoin is considered an effective hedge against inflation and monetary instability.
"This is a logical step to protect the country's wealth," Gurbacs said. "Bitcoin offers diversification that traditional assets like Treasury bonds cannot provide."
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However, this view was questioned by a number of parties, including former Wall Street Journal journalist Paul Vigna. He questioned the logic behind the world's safest asset exchange (Treasury bonds) with highly volatile assets such as Bitcoin.
"Is this a wise move for an institution as big as the Federal Reserve?" asked Vigna. "The risk of loss is enormous."
The Fed's ambitious plans have significant impact on the crypto market and the global economy. If realized, the large-scale acquisition of Bitcoin by the US government will provide greater legitimacy to these crypto assets and drive the price of Bitcoin higher.
On the other hand, there are concerns that this move could trigger a larger crypto asset bubble. If the price of Bitcoin plummets drastically, then the US government will face enormous financial losses.
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