Make America Great Again? Trump's Answer: Cryptocurrency

On January 23, 2025, U.S. President Trump signed Executive Order 14178, aimed at strengthening America's leadership in the field of digital financial technology. In my view, there are two important points in this executive order:

1⃣ Promote and protect the sovereignty of the U.S. dollar, including taking actions to promote the development and growth of globally legitimate and compliant dollar-backed stablecoins.

2⃣ Prohibit central bank digital currencies.

The dollar is facing a de-dollarization threat globally. The issuance of Executive Order 14178 illustrates Trump's intention to reconstruct a new world financial order and continue to maintain America's financial dominance.

Advancing the Bitcoin strategic reserve plan aligns with this intention. The White House cryptocurrency summit on March 7 also became a focal point of widespread market attention.

The core of the Bitcoin strategic reserve has two purposes: in addition to building a new world financial order through cryptocurrency, it aims to combat inflation and reduce U.S. debt through the Bitcoin strategic reserve. The debt issue has particularly become America's Achilles' heel. The total U.S. debt is approximately $36 trillion, and interest payments over the past 12 months (as of January 2025) have reached a record $1.2 trillion.

Currently, the U.S. government holds about 210,000 Bitcoins. Assuming a Bitcoin price of $100,000 each, this totals $21 billion, which is a drop in the bucket compared to U.S. debt. As the Bitcoin national strategic reserve plan progresses, the U.S. plans to expand its Bitcoin holdings to 1 million coins. If Bitcoin reaches $200,000 each in the next five years, the total value would be $200 billion. Currently, the value of U.S. gold reserves is estimated to be between $679.9 billion and $758.3 billion. Even if Bitcoin's value and gold's value still have a gap five years from now (the value of gold will also increase further in the next five years, and Bitcoin's price may exceed $200,000 each), it will still play a significant role in hedging against U.S. debt risk. Of course, considering that Bitcoin's value volatility is greater than gold's, if Bitcoin becomes a national strategic reserve, there is reason to believe that Bitcoin's volatility will significantly decrease.

In summary, Trump's support for cryptocurrency as U.S. President has clear objectives:

1⃣ In the face of global de-dollarization threats, switch tracks to continue maintaining America's financial dominance. There are many reasons why the U.S. has become a global superpower, including dollar hegemony, military strength, innovative technology, and cultural penetration. Among them, the global financial system centered on the dollar is the most indispensable support. If the U.S. loses its global financial dominance, it essentially means that the U.S. has lost its global leadership.

2⃣ Achieve a rebalancing of the U.S. balance sheet. On one hand, it is necessary to expand asset returns, and cryptocurrencies represented by Bitcoin are a good choice, but it is essential to guard against significant price fluctuations. On the other hand, it is necessary to reduce spending and lower debt costs, which also explains why Trump had Musk lead the formation of the Department of Efficiency. After all, a country with continuously rising debt and enormous expenditures cannot become great again. @PANewsCN

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