Europe and US: Who Will Take the First Step in the BTC Reserve Race?

Recent developments in Sweden and the United States show that there is growing political interest in investing in Bitcoin (BTC) as a strategic reserve asset. On October 2nd, members of parliament from the Sweden Democrats submitted a motion urging the government to explore the possibility of a national Bitcoin reserve. These proposals not only complement the traditional reserves in Swedish krona and gold; they are also imbued with strong skepticism towards central bank digital currencies (CBDCs).

Simultaneously, US Representative Nick Begich has re-presented his plans for a "Strategic Bitcoin Reserve." He refers to the Bitcoin Act, which was reintroduced in March, with a plan to purchase up to one million BTC over five years through so-called "budget-neutral" mechanisms. These simultaneous signals highlight that politicians in two advanced economies are experimenting with the idea of ​​sovereign BTC exposure, all within the same news period.

From Words to Actions: The Economic Impact of Bitcoin Reserves

A federal purchase of one million BTC in the US would represent approximately 4,76% of the established supply of 21 million BTC and would require an investment of approximately $120 billion, at a value of $120.000 per BTC. Even a smaller initial tranche would impact market liquidity, create scarcity, and reduce the available supply for private buyers – effects we've seen before with government accumulations.

For example, El Salvador's on-chain reserve of just over 6.260 BTC represents only 0,03% of the total Bitcoin supply. Yet, the visibility of this amount has made the idea of ​​sovereign BTC ownership tangible for policymakers. The motion from Sweden does not specify a target size, but follows a logic consistent with other proposals, such as that of the Czech central bank's government envoy, who proposes investing up to 5% of foreign exchange reserves in Bitcoin. This would represent approximately €7 billion, or about 63.000 BTC at a price of $120.000, representing 0,3% of the total supply.

The political signals are therefore not only related; they also point to increasing cooperation between countries, although the legal routes vary. In Sweden, the motion will go through the Riksdag, and if passed, the government could have the Minister of Finance and the central bank investigate the possibility of a purchase. In the US, Congress has the authority to organize purchases, a fact supported by the March executive order establishing a federal Bitcoin reserve and digital asset supply.

Key policy steps and their consequences

The necessary policy steps to truly influence macroeconomic relationships are both simple and powerful. First, legal authority must be established for the purchase and management of Bitcoin as a reserve asset, with clear guidelines for monitoring, auditing, and reporting. Once a significant sovereign actor is able to make purchases programmatically rather than opportunistically, the absorption of supply becomes more predictable.

Second, a funding mechanism is needed, whether it's budget-neutral measures in the US or reallocation rules in Europe, that automates bidding across economic cycles. A third crucial step is a frequency of disclosure that matches that of foreign exchange reserve data. If markets can respond to planned public purchases, BTC might lose its sensitivity to real yields, allowing demand for BTC to become more "policy-driven" rather than simply driven by "risk appetite," similar to how public sector purchases have reduced gold's sensitivity to interest rate changes.

Consequently, clear and credible sovereign challenges could weaken the historical inverse correlation between BTC and real returns during accumulation phases, depending on the size and transparency of the programs. To put this in perspective, the US proposals would represent approximately 4,76% of the total BTC supply. At the same time, El Salvador already holds over 6.260 BTC, and the Czech governor's experiment would capture 0,3% of the supply.

It's also important to remember that the US federal government already holds a significant amount of BTC, worth approximately 200.000 BTC, resulting from confiscations—nearly 1% of the total supply. If some of these holdings are formalized as strategic reserves, it will no longer be a "new" issue, but the shift in mandates could alter global patterns.

Given Bitcoin's fixed supply and global signals, a reserve race between the US and Europe seems a plausible outcome. The challenge will be whether parliaments and Congress can translate their rhetoric into purchase authorizations, financing regulations, and disclosures that markets can anticipate.

If this conversion succeeds, the revaluation won't just be about Bitcoin's value rising due to government purchases. It will also mean the entry of a new class of structurally price-insensitive players into the market, which will influence how Bitcoin performs against real yields, foreign currencies, and risky assets.

Frequently Asked Questions

What is the significance of a national Bitcoin reserve for the economy?
A national Bitcoin reserve could promote asset diversification and provide a buffer against economic fluctuations, while simultaneously increasing confidence in monetary policy.

How do the policies of countries like Sweden and the US affect the price of Bitcoin?
The potential for significant accumulation by governments could substantially increase demand for Bitcoin, potentially driving up its price through the scarcity effects it creates.

Are there risks associated with governments buying Bitcoin?
Yes, there are risks such as market turbulence and legal complications. Moreover, a heavy reliance on Bitcoin as a reserve asset can also create vulnerabilities in the financial system if volatility increases.