From Donald Trump’s strategic Bitcoin reserve to the potential for a Santa rally, fintech CEOs had plenty to say about the world’s most popular cryptocurrency this week.
Tim Kravchunovsky, founder and CEO of the decentralized telecommunications network Chirp, said it is great to see Donald Trump coming through on his promise of creating a strategic Bitcoin reserve so soon after the election. Many, including Kravchunovsky, initially took Trump’s crypto promises with a pinch of salt during the presidential campaign because everyone knows that politicians will say anything to get elected. But it appears he is putting his money where his mouth is, which is going to be incredibly positive for the crypto industry as a whole over the coming few years.
“If America builds a Bitcoin reserve, this will create a FOMO effect, so we’re likely to see other countries following suit and sovereign wealth funds introducing Bitcoin allocations to their portfolios,” Kravchunovsky predicted. “Bitcoin is going to be in every investment portfolio, on par with other alternative asset classes like gold, and it will happen sooner than people think. Already, several other countries are interested in building a Bitcoin reserve, from Brazil to Russia and, most recently, Japan. I believe we will see a lot more progress on this in the next few months.”
“This will not only create a huge deal of support for the price of Bitcoin but also add legitimacy to the rest of the crypto ecosystem. The Bitcoin reserve is a first step toward incorporating crypto and blockchain into the wider market, so we will likely see more funding and acceptance for crypto projects, especially anything to do with infrastructure or real-world assets. And for the US, a Bitcoin reserve is the only way to reduce its $36 trillion debt pile and escape an enormous crisis. So this is simply a smart financial decision.”
The U.S. Federal Reserve has a role to play, too, and Chair Jerome Powell’s recent comments about a Bitcoin reserve counter Trump’s. Mercuryo co-founder and CEO Petr Kozyakov said Powell’s recent comments have scared markets after a months-long boom.
“Powell poured cold water on any prospect of the US Central Bank holding a so-called Strategic Bitcoin Reserve while also signalling a slower pace of rate cuts next year,” Kozyakov said. “The biggest cryptocurrency now carries a weight and dimensions that make it far removed from its early form when crypto-anarchists and cypherpunks used the Internet to trade ‘digital cash.’ After the launch of a flurry of Bitcoin ETFs in the US earlier this year and heavy institutional interest, bitcoin is now charting a very different course.”
Kozyakov said chances of a Santa rally look good after Bitcoin topped $106,000. They may be self-fulfilling as institutional and retail traders alike pile into the biggest cryptocurrency. While institutional interest grabs the headlines, Kozyakov said the retail market has more opportunities than ever before to press the ‘buy bitcoin’ button.
“A myriad of platforms are now available that provide a seamless and secure interface on which to transact with cryptocurrency,” Kozyakov said. “As familiarity with Web3 architecture grows, so does the process of moving effortlessly between digital tokens and fiat currency. The advancement of Web3 technologies is quietly mirroring Bitcoin’s rise as the space continues to evolve at a breakneck pace.”
Kravchunovsky said recent Fed activity dampens the mood, but crypto has proven resilient in the past and could do so before Jan. 1.
“It’s all doom and gloom in the crypto markets today, driven by expectations that the Federal Reserve will turn hawkish for the coming months and escalating fears over the US debt ceiling,” Kravchunovsky said. “But there is still a reasonable chance we will see a Santa Rally into the end of the year. As we have all witnessed many times, crypto markets can recover as quickly as they drop, especially at this point in the cycle, when volatility is high.”
Kravchunovsky said the crypto market is currently following traditional stock markets, which are gripped by fear. The markets are very sensitive to the Fed’s rhetoric, and he said this is exactly what happened last time the US debt ceiling question arose, but then the can was kicked down the road, and everyone forgot about it.
“In my view, President-Elect Donald Trump’s suggestion to abolish this ceiling is a sensible one,” he said. “The debt ceiling has been raised 78 times since 1960. At this point, it’s just an arbitrary number, and every time this question arises, it causes unnecessary panic.
“For us in the crypto industry, though, this sell-off shouldn’t be seen as anything other than a natural part of the bull cycle. This volatility can present opportunities for traders, but it has no bearing on projects focused on building infrastructure. Whether crypto rallies over the festive period or not changes absolutely nothing in terms of our outlook for 2025.”