Arthur Hayes's new article: Beyond Bitcoin's national reserves, the U.S. crypto hegemony has other ambitions
Anything that can be bought can also be sold.Author: Arthur Hayes
Compiled by: Deep Tide TechFlow
(This article reflects the author's personal opinions and should not be taken as investment advice or recommendations for participating in investment transactions.)
The Pax Americana Make-A-Wish Corporation located in Mar-a-Lago welcomes a large number of "wishers" every day. People in the cryptocurrency space, like everyone else, are lining up, trying to seize the opportunity to fulfill one or more wishes. This capricious "genie"—the master known as the "orange man"—holds "court" every week in his private club, which combines rustic charm with nightclub style, in the swamps of South Florida, accompanied by classic pop songs from the 1980s and surrounded by a group of sycophantic followers.
The genie itself is neither good nor evil; what we really need to judge is whether the wishes of the wishers are reasonable. Every culture in the world has moral stories about "wrong wishes," where desires for success, wealth, or personal happiness through shortcuts often lead to unexpected consequences.
The core message of these stories is: there is no "shortcut button" in life; all good things come from hard work and effort.
In the global cryptocurrency industry, there are two prominent "wishes" worth discussing—one is to establish a Bitcoin Strategic Reserve (BSR), and the other is to promote Pax Americana-style cryptocurrency regulation. Overall, many crypto practitioners hope that the U.S. government will buy Bitcoin through money printing as part of national reserves while establishing favorable regulatory barriers for their crypto-related businesses. I believe these wishes are misguided. We should choose a more difficult but meaningful path and make a request to the "genie" that cannot be easily overturned by the next government, regardless of its political party.
In the first part of this article, I will argue why BSR and the patchwork of crypto regulatory bills will have negative impacts on the industry's development, both locally and globally. Then, I will provide some advice to those who line up every day in striped suits or summer dresses to make wishes to this "orange genie," telling them what more valuable wishes they should make.
Bitcoin Strategic Reserve (BSR)
Anything that can be bought can also be sold. When a government hoards a certain asset, the core issue is that such buying and selling behavior is usually driven by political motives rather than economic interests. In the current global economic framework, what direct benefit can Bitcoin bring to the U.S. government? The answer is none. Bitcoin is just another financial asset. While some readers may believe that Bitcoin is "the hardest money in history," created by "the one true god" Satoshi Nakamoto, I can assure you that the actions of that "genie" (referring to political figures) are not motivated by reverence for the divine but rather to cater to the voter base that put him in power.
Suppose Trump successfully establishes a Bitcoin Strategic Reserve (BSR). The government buys one million Bitcoins according to U.S. Senator Lummis's proposal. What would happen? The price of Bitcoin would skyrocket, the market would go into a frenzy, but as the government completes its purchases, the "only up" trend of Bitcoin would abruptly stop.
Fast forward two to four years. By 2026, voters may become disillusioned with Trump for failing to effectively control inflation, end endless wars, improve food safety, or address government corruption, and the Democrats may seize this opportunity to regain power. What if they gain an absolute majority in the House of Representatives sufficient to overturn a presidential veto? Let’s assume that by 2028, a Democratic president is elected, such as Gavin Newsom, who may rise like a "phoenix." Meanwhile, certain controversial policies, such as allowing minors to undergo gender reassignment surgery without parental consent, may again become a reality. Some voters may cheer for this.
For an incoming Democratic-controlled government, finding ready funds to meet the demands of its supporters is a top priority. And this is not just the Democrats; in fact, any political party cannot escape this logic. At this point, the government's Bitcoin reserves—one million coins—would be quietly sitting there, ready to be used as a "cash machine" with just a signature. The market will naturally worry about when and how these Bitcoins will be sold. Will the government try to minimize market impact and maximize dollar returns, or will it intentionally suppress cryptocurrency holders who support the "orange man" for political purposes? We cannot know. But this uncertainty will severely undermine market confidence in Bitcoin and the entire cryptocurrency industry.
If the U.S. government decides to hoard "shitcoins" like Ripple, these cryptocurrencies will inevitably be transformed into a powerful political tool. However, as a purely political strategy, will the U.S. government really engage seriously with the crypto community? Will they donate to support the work of Bitcoin core developers? Will they run Bitcoin nodes? Perhaps it is possible… but from the current discussions about BSR, it seems more like a "buy and forget" plan. Trump and the Republicans may see Bitcoin prices soar and then declare "mission accomplished," using the opportunity to raise more campaign funds from David Bailey at lavish dinners priced at $10,000 a plate. Don’t blame the players; blame the rules of the game. However, making such a wish to the "genie" could bring unnecessary suffering to the crypto industry within two years.
Frankenstein-style Crypto Bills
To understand the regulatory policies that a cryptocurrency holder (Hodler) desires, the simplest way is to look at their investment portfolios. From my perspective, far removed from the noise surrounding the "genie," those with significant investments in centralized crypto financial intermediaries are often the most likely to achieve their regulatory wishes because their voices are the loudest. Unfortunately, developers dedicated to building truly decentralized technologies and applications do not have enough financial resources to participate in the political game during this cycle. The wealthiest crypto practitioners typically control exchanges, brokerage services, or some form of lending platform.
Therefore, if crypto regulatory wishes are indeed fulfilled, they may manifest in a complex and highly prescriptive regulatory form that only large centralized companies with deep pockets can afford to comply with. This is because the only people who can understand these laws are the professional corporate lawyers who navigate between various regulatory agencies. And these lawyers do not come cheap—charging up to $2,000 per hour. Perhaps this is considered "cheap" in Dubai, but to me, it is an expensive cost.
Is this really the outcome that the broader crypto community hopes to receive from the "genie"? Is it all just to make Brian Armstrong and Larry Fink richer? I am not criticizing them; they are simply doing their jobs responsibly—maximizing shareholder value by establishing monopolistic structures to make their businesses stand out. Perhaps the shareholders of Coinbase and BlackRock do indeed wish to see such a Frankenstein-style crypto bill. But in my view, such regulations will not change the existing industry landscape. While they may not have a direct negative impact on the crypto industry, they certainly cannot be said to have any positive effects.
For those entrepreneurs who have relocated to the U.S. believing that it has a "crypto-friendly" government, please think twice. If you acquiesce to such a situation, your startup is likely to end in failure. Those monopolistic enterprises that rely on complex regulatory barriers to protect themselves have no interest in genuine innovation. They will use their unique privileged position to keep potential competitors at bay. As an entrepreneur, you may arrive at JFK Airport in business class, but when you leave, you may very well have to fly back in economy class.
Make a Wish
If I could make a wish, what would I wish for? I will tell you the answer. But in my style, before revealing it, we need to review financial history and interpret certain key events through my lens.
The core question is, why would the "genie" grant my wish, or at least a close variant? The "genie" and those who actually control the operation of the state will only consider my wish if it helps them achieve their goals.
Trump's two key aides—U.S. Treasury Secretary Scott Bessent and Secretary of State Mark Rubio—have the primary goal of consolidating the dollar's position and maintaining U.S. hegemony by reforming the global economic order. As I mentioned in my previous article The Ugly, the dollar system is actually composed of two parts: one is currency, and the other is reserve assets. Since the Bretton Woods Agreement was signed in 1944, the dollar has been the global reserve currency, but the form of reserve assets has changed over time.
Evolution of Reserve Assets in the Dollar System
1944 - 1971: Gold
During this period, the value of the dollar was fixed at $35 per ounce of gold. Sovereign nations allied with "Pax Americana" could exchange dollars for gold at this price.
1971 - 1994: Oil
To pay for the enormous costs of the Vietnam War and the large-scale social welfare programs implemented by his predecessor Lyndon B. Johnson, U.S. President Richard Nixon decided to end the gold standard. From then on, reserve assets shifted to petrodollars. Saudi Arabia became the first country to explicitly agree to price oil in dollars and invested its dollar surplus from oil revenues in U.S. Treasury bonds. This arrangement allowed the U.S. Treasury to issue bonds, which were effectively backed by the oil flows of the world's largest marginal oil producer.
1994 - 2025: Foreign Exchange Reserves of Global Exporters
Entering the 1980s, the U.S. significantly enhanced its economic resilience by increasing oil production and improving energy efficiency. Meanwhile, the rise of China and the Asian "Four Tigers" (South Korea, Taiwan, Japan, Malaysia, Thailand) enabled goods to be produced at extremely low costs for consumption by American and Western European consumers. In 1994, China adopted a strategy of massive renminbi devaluation, officially joining the global mercantilist competition for foreign exchange reserves through exports. These exporting countries were allowed access to the vast Western consumer market, but on the condition that they priced their goods in dollars and invested surplus dollars in U.S. Treasury bonds.
2025 - Future: Bitcoin/Gold
However, China is unwilling to continue playing a subordinate role in the "Pax Americana" system. For China, the 20th century was a "century of humiliation," with weak Qing dynasty emperors signing unequal treaties with great powers, followed by two world wars and a civil war that plunged the nation into despair. In the long history before the European Renaissance, China was the world's largest economy. Therefore, the Chinese Communist Party (CCP) sees "achieving the great rejuvenation of the Chinese nation" as its core goal. In fact, the idea of "making America great again" (MAGA) is not unique to the U.S.—China has been pursuing its own national rejuvenation since 1949.
To achieve this goal, China has successfully transformed from a low-cost, low-quality manufacturing country to a low-cost, high-quality production country. However, when the Chinese leadership realized that purchasing more U.S. Treasury bonds with surplus dollars would only further entrench its status as a "secondary power" to the U.S., they decided to stop accumulating Treasury bonds. Under the previous understanding, every dollar of export surplus had to be used to purchase an equivalent amount of U.S. Treasury bonds. However, according to publicly available data from the past 12 months, although China earned $1 trillion through export surpluses, its U.S. Treasury bond reserves decreased by $14 billion.
This trend has also caught the attention of other exporting countries. In the rapidly developing Global South, most countries now trade more with China than with the U.S., even though much of this trade is still denominated in dollars. "De-dollarization" does not mean completely abandoning the dollar, but rather investing surpluses in assets not dominated by "Pax Americana," such as Bitcoin and gold. This marks a potential transformation of the global economic order.
Trump's aides face a tricky problem: they need to design a new system that retains the dollar as the primary currency for global trade while finding a suitable reserve asset to maintain the normal operation of the U.S. Treasury bond market. If they truly have enough capability, they might even manage to reduce the ratio of U.S. public debt to GDP to around 30%—the level it was at in 2000.
However, the global market is no longer willing to view U.S. Treasury bonds as a savings tool. This is precisely why a "neutral reserve asset" needs to be introduced. No country is trying to replace the dollar with its own currency because the decline of "Pax Americana" is evident, and this decline is caused by the economic imbalances brought about by the dollar as the global reserve currency.
Before continuing to discuss my wish, I want to talk about how a top strategist in the traditional finance (TradFi) money market views this issue.
DeepSeek
Zoltan Pozsar is a former staff member of the Dallas Federal Reserve and a strategist at Credit Suisse. His current blog is highly regarded by the financial elite of "Pax Americana." His solution (which I will elaborate on later) may be implemented, so it is worth discussing. But I will also point out where I diverge from his views. Ultimately, I believe his solution is more suited to the 1980s than to 2025.
Many strategists who believe in "American exceptionalism" think that reclaiming the power and prestige of "Pax Americana" is akin to a scene from the movie "Top Gun." In their imagination, a dashing Tom Cruise pilots an F-14 fighter jet, easily defeating his Russian and Chinese rivals. However, this idea is clearly misguided.
The recent sequel to "Top Gun" may better reflect the current international situation with just a slight adjustment. Replace the nearly $75 million F-18 fighter jet with an Iranian-made Shahed drone. This drone costs only $50,000 and is widely sold in Global South countries. Tom Cruise, despite being over 60, still pilots these overly expensive fighter jets, while his opponents are a swarm of drones connected through AI technology, costing just a fraction of the price of the fighter jets. On the battlefield in Ukraine, both Russia and the U.S. have witnessed how traditional 20th-century weapons are powerless in a modern drone-dominated battlefield.
This brings to mind DeepSeek. If you are too immersed in the world of TikTok, you might not know that DeepSeek is a revolutionary AI large language model (LLM). Its performance rivals that of ChatGPT or Claude, but its training costs are 95% lower. More importantly, it is open-source. So far, no CEO of a tech giant, such as NVIDIA's Jensen Huang or Microsoft's Satya Nadella, has come forward to question the authenticity of its results or the reasonableness of its costs.
The significance of DeepSeek lies in the fact that it was developed by a hedge fund practitioner from Hangzhou, China. Against the backdrop of the U.S. imposing an economic blockade on China regarding high-performance semiconductors, the U.S. logic assumes that Chinese entrepreneurs cannot train and deploy LLMs with performance comparable to those trained on U.S. high-performance chips. However, the success of DeepSeek directly shatters the entrenched notion that "whoever spends the most money has the best LLM performance." It also reaffirms the old adage: "Necessity is the mother of invention." Even in the face of economic sanctions, a small Chinese startup team of only 200 people has achieved breakthroughs through determination. If the U.S. cannot destroy China's productive capacity through ground warfare, then the era of American exceptionalism may indeed be coming to an end. In fact, there is nothing wrong with becoming an ordinary country, unless your entire national identity is built on a fictitious sense of national superiority, believing you are superior just because you were born in "America."
When non-American elites perceive themselves as inherently inferior, they often choose to comply. This mindset allows American financial elites to easily dominate global policy, such as deciding which currency a country uses in trade and how to invest its national surpluses. However, if non-Americans begin to realize their equality with Americans, they may no longer easily accept directives from American diplomats. This is particularly important for Zoltan's policy recommendations, as his measures are based on bilateral cooperation. If Bessent makes a "do as I say" request, a country's treasury may comply, but if that country refuses, then everything is off the table. This is the fatal flaw in Zoltan's policy proposal.
Zoltan's goals align with mine: to weaken the value of U.S. Treasury bonds. Additionally, Zoltan correctly points out that the U.S. needs to extend the maturity of its debt and reduce interest payments. Suppose Bessent wants to reduce the debt-to-GDP ratio from 100% to 30%. If GDP remains unchanged, the actual value of the debt needs to be reduced by 70%. Zoltan's core idea is to ask foreign creditors to exchange their short-term Treasury bonds for century bonds. These century bonds are non-tradable, but if the creditor country needs cash, they can be repurchased at face value.
Let me explain how this mechanism works:
Suppose you are a Global South country (a term with obvious derogatory connotations) holding a $100 face value 10-year U.S. Treasury bond, which also has a face value of $100.
According to Bessent's request, you need to exchange this 10-year bond for a zero-coupon 100-year bond (the so-called century bond). The actual market value of this century bond is only $30, but its face value remains $100. To simplify, I have streamlined the bond math. A bond with no coupon income and a longer maturity will inherently have a lower intrinsic value than a bond with a coupon and a shorter maturity.
Through this exchange, your debt's actual value is reduced by 70%, but the face value remains at $100.
If you are a "compliant ally" (like Europe… though a bit unreliable) or a "loyal vassal" (like the Philippines… in fact, Europe might also belong to this category), you can contact the Federal Reserve at any time to exchange this century bond at face value for dollars, without incurring any costs. For example, when you need to purchase oil from Saudi Arabia in dollars, this century bond's actual market value is only $30, but the Federal Reserve will exchange it for you today at the face value of $100, without charging interest.
However, from then on, any dollar surplus you have can only be used to purchase future century bonds. You are not allowed to buy any other financial assets.
This transaction has both pros and cons. The downside is that your debt's actual value is reduced by 70%, which effectively devastates your country's savings system. Worse still, you agree to obtain liquidity support only from the debt issuer—the Federal Reserve—and cannot freely trade through global markets. On the other hand, if you "behave," the Federal Reserve will provide you with interest-free loans at face value.
The benefit of this transaction is that if you are willing to accept this "naked humiliation," you can enter the circle of shared prosperity under "Pax Americana." The punishment is that if you refuse to accept this transaction, your export goods will be heavily taxed or even completely blocked, and you will also be unable to obtain U.S. weapons to deal with domestic and foreign conflicts.
However, it is important to note that these factors combined may lead many countries to reject this transaction. First, for many countries, China has now replaced the U.S. as their largest trading partner. Second, U.S. weapon supplies are already stretched thin, as they have been largely used to arm Ukraine. Furthermore, many U.S. weapons are merely re-exported Chinese intermediate products, so why not go directly to China for purchases? Finally, psychologically, if a country has already shed its "slave mentality," why would it voluntarily accept such "naked humiliation"?
My Vision
Can I improve upon Zoltan's ideas? The answer is clearly yes.
Our core goal remains unchanged: to weaken the actual value of existing U.S. Treasury bonds, maintain the dollar as the primary currency for global trade, and extend the maturity of Treasury bonds to 100 years. At the same time, I propose a new goal: to establish Bitcoin as a global neutral reserve currency.
Choosing a reference asset for currency devaluation is crucial. If the reference asset is a commodity with practical uses, such as oil or food, it may trigger social unrest due to inflation. Therefore, the devaluation must target an asset that does not substantially harm the living standards of ordinary people.
Zoltan's proposal is to use time as the reference for devaluation. His idea is to exchange a 10-year bond for a 100-year bond. According to the time value of money theory, an asset that can only be redeemed in 100 years has an intrinsic value far lower than an asset that can be redeemed in 10 years. However, this exchange requires the consent of the counterparty. I believe the reference for devaluation should be Bitcoin. More importantly, this devaluation can be implemented unilaterally, achieving the same end result as Zoltan's method.
My Plan:
Step 1: Public Declaration
Bessent gives a speech announcing that the U.S. plans to restructure the global reserve currency system. The dollar will continue to serve as the pricing currency for global trade, but the reserve asset will be replaced by Bitcoin.
Step 2: Gradual Devaluation
The U.S. Treasury will purchase Bitcoin at prices higher than the current market price. In this way, it will gradually increase Bitcoin's total market value, making it large enough to serve as a global reserve asset. For example, if Bitcoin's market value is to reach a scale comparable to that of the U.S. Treasury bond market, its price must rise to $1.8 million.
Example:
Suppose Bitcoin's current price is $100,000, and Bessent announces that the Treasury will buy Bitcoin at $200,000. However, unlike traditional purchasing methods, the Treasury will not pay cash but will provide a blockchain-based 100-year zero-coupon bond (century bond). Additionally, anyone meeting identity verification requirements can repurchase these bonds at face value without interest, with a rolling one-year repurchase period. In other words, Bitcoin sellers appear to receive dollars, but in reality, they hold century bonds in the form of loans.
Market Reaction:
Since the Treasury's offer is above the market spot price, this provides traders with an arbitrage opportunity. Traders can borrow dollars to purchase Bitcoin at a spot price lower than the Treasury's offer, then sell it to the Treasury in exchange for century bonds, and finally use the repurchase mechanism to convert the bonds back into dollars, repaying the loan with those dollars. Since all of this is done on the blockchain, anyone globally can participate in this transaction, and Bitcoin's price will quickly rise to the Treasury's offer level.
Criticism:
Why would Bitcoin holders be willing to exchange Bitcoin for a "non-attractive" century bond? The reason is simple: the price is high enough. It’s like how many people think giving Bitcoin to BlackRock is a good idea. If the price is attractive enough, most idealism and common sense will be cast aside.
Step 3: Extend the Maturity of Treasury Bonds
At this point, the U.S. Treasury's asset side holds Bitcoin, while the liability side consists of century bonds. The market will anticipate that Bessent will continue to raise the offer, prompting preemptive action. At this time, the Treasury can sell Bitcoin at a higher price in exchange for dollars. For example, when the market price rises to $300,000, and the Treasury previously purchased Bitcoin at $200,000, this $100,000 profit can be used to repurchase 10-year Treasury bonds. In this way, Bessent can gradually extend the weighted average maturity (WAM) of national debt.
Treasury bond holders will not suffer losses because they know the Treasury will use trading profits to purchase non-circulating bonds. This is crucial because it maintains the confidence and stability of traditional financial institutions (TradFi) in using Treasury bonds as collateral and pricing loans.
Step 4: Social Media Banking
To further consolidate the dollar's dominance outside of China (since large American social media platforms like Facebook and X are banned in China), Bessent proposes that Zuck (CEO of Facebook) and Musk (CEO of X) introduce a dollar stablecoin transfer feature in their respective applications. Ideally, the best choice would be to use Ethena's synthetic dollar stablecoin USDe. In this way, the entire world, especially the Global South (where Facebook, WhatsApp, and Instagram are the main online communication and business platforms), will be integrated into the dollar system. This strategy can effectively counter any attempts by these countries to de-dollarize.
More importantly, the leaders of these countries can hardly stop this trend. If they try to deprive ordinary people of their reliance on social media, it could trigger social unrest overnight. Just as the U.S. cannot ban TikTok owned by China, because the younger generation will vote out any politician pushing for a ban in the next election.
As digital dollars gradually accumulate globally, these dollar surpluses may be stored in Bitcoin or other cryptocurrencies. If Bitcoin prices continue to rise, small holders will naturally be attracted to sell Bitcoin back to the Treasury in exchange for century bonds. This way, the holders of U.S. Treasury bonds will shift from a few countries to ordinary people globally. Rather than persuading a few countries not to sell off their debt, it is better to have billions of ordinary people holding the debt in a dispersed manner, as this almost eliminates the risk of a simultaneous sell-off. Ultimately, the Treasury's goal is to ensure that debt holders are willing to hold these bonds for the long term.
Technical Blueprint
Regardless of what World Liberty Financial (WLF) claims to be developing for investors, this is what they should really be doing. If you don't know yet, World Liberty Financial is a cryptocurrency organization associated with the Trump family. Its goal is to leverage Web3 technology and WLF to build infrastructure that brings direct reform to the U.S. Treasury. This approach will bypass the traditional "too big to fail" banks, but what have these banks done besides triggering one financial crisis after another and needing money printing bailouts? Ultimately, the currency inflation they create is eroding the economic foundation of the U.S.
Just take a trip to New York City, the financial center of "Pax Americana," and you will see the reality for yourself. The nightclubs may be brightly lit, but the shadows of poverty, homelessness, and crime are everywhere. This is all attributable to the traditional banking system, such as JP Morgan & Chase.
The Web3 tech stack should be supported by public blockchains. You know the answer: never stop pushing forward! From this perspective, Aptos is the ideal choice. It is currently the fastest (800 milliseconds), cheapest (only $0.00005 per transaction), and most reliable (99.99% uptime) public blockchain capable of supporting high-performance financial transactions.
Moreover, Aptos's performance proves this point. According to RWA.xyz data, Aptos is quietly emerging as one of the top three networks with the most on-chain institutional assets, while also establishing partnerships with institutions like Franklin Templeton, Brevan Howard, and Microsoft. Its MOVE architecture was specifically designed by Facebook for handling financial transactions for the world's largest social network, making it fully capable of fulfilling this task.
Maelstrom will not work for free. It should be stated upfront that we hold a significant amount of Aptos and Ethena assets.
The U.S. Treasury needs to establish an on-chain exchange for trading digital dollars, century bonds, and Bitcoin.
Step 1: Launch Digital Dollars. The Treasury needs to select two types of digital dollars: Tether's USDT and Ethena's USDe. USDT is essentially dollars held in the U.S. banking system, while USDe is a synthetic dollar generated through long positions in cryptocurrencies and short positions in perpetual swaps; all its assets are held in major cryptocurrency exchanges. The essence of politics is "exchange of interests," so how can the existing government benefit from these two options? U.S. Commerce Secretary Howard Lutnick holds equity in Tether, while World Liberty Financial (WLF) holds millions of dollars worth of Ethena governance tokens $ENA. If Tether and Ethena are chosen as the Treasury's recognized digital dollars, both equity and token holders will benefit. This "self-interest" is the fundamental driving force behind human societal development.
Step 2: Tokenize Century Bonds. The Treasury can issue a token (TSY100) for each century bond. Users can purchase these tokens using wrapped Bitcoin (Wrapped Bitcoin) on the Aptos blockchain (this is already possible through tools like Wormhole, Celer, and LayerZero). Next, a repurchase mechanism needs to be established, allowing users to collateralize TSY100 and obtain loans in USDT or USDe.
Technical Explanation: From a technical perspective, the Treasury cannot directly create USDT or USDe. Therefore, if a user needs USDT, the Treasury must mint USDT by transferring funds to Tether's bank account. If a user needs USDe, the Treasury must first mint USDT and then generate USDe through Ethena's mechanism. This process can be automated through APIs provided by Tether and Ethena and completed in atomic transactions.
Step 3: Build a Web3 Money Market Exchange. The Treasury needs to establish a permissioned Web3 money market exchange, which we can call EagleSwap. The Treasury already has an identity verification service called ID.me (an example of an online identity verification service). This service can be expanded to allow global users to whitelist their Aptos wallets through signatures. When users connect their Aptos wallets to EagleSwap via desktop or mobile devices, they can freely trade between USDT, USDe, TSY100, and wrapped Bitcoin if they are on the whitelist. As the Treasury engages in large-scale buying and selling of Bitcoin, dollars, and Treasury bonds globally, EagleSwap will quickly become the most liquid venue for trading these assets.
Next Phase: Connect Social Media Platforms. The Treasury can also collaborate with globally oligarch-controlled social media platforms. Facebook and X are the most suitable candidates for introducing crypto wallet features. By abstractly connecting their users to EagleSwap, these users will be able to easily transfer, trade, and store digital dollars, century bonds, and wrapped Bitcoin. For the Global South, the most pressing need is to conduct business in dollars outside of their traditional financial systems. Although the dollar may have issues, it remains a more stable choice compared to other fiat currencies. The technical infrastructure to build this connection should be completed using the Aptos blockchain.
The oligarchs' control is unquestionable, as evidenced by their prominent positions during Trump's inauguration. Next, they need to take further action to weaken the parasitic traditional financial (TradFi) banks.
Previously, I discussed how to implement this strategy through unilateral devaluation of the dollar and related technical means. Next, I will explore why the U.S. can gain a unique advantage in the production of "neutral reserve assets" by enacting appropriate laws.
Neutral Reserve Assets: America's Potential Advantage
For the elites controlling Pax Americana to accept this proposal, the U.S. must have some unique competitive advantage in Bitcoin mining. It is well known that Bitcoin mining requires a large amount of energy to solve complex mathematical problems. So the question arises: does the U.S. have a cheap and abundant energy supply? The answer is yes; the U.S. has two significant advantages in energy production.
First, America's abundant hydrocarbon resources. The U.S. has vast untapped hydrocarbon resources located within what we call "national borders." All that is needed is sufficient capital and government drilling permits. More importantly, drilling activities that provide energy for Bitcoin mining are not limited by the geographical location of energy. Typically, energy reserves are often far from major population centers, and the transportation costs of moving these resources to cities can sometimes exceed the extraction costs. However, if power plants are built directly at the resource sites to supply electricity to Bitcoin mining operations, the transportation hassle can be completely avoided.
Many remote areas, while rich in energy resources, often cannot effectively utilize these resources due to a lack of pipeline and transportation infrastructure. By establishing localized power stations and Bitcoin mining operations in these areas, these "stranded" energy resources can be fully utilized. For example, Alaska is not only remote and rich in hydrocarbon resources, but its cold climate is also very suitable for building Bitcoin mining facilities. The cold climate can significantly reduce cooling costs for mining equipment, making Alaska an ideal Bitcoin mining base.
Second, America's tradition of capitalism. The U.S. capitalist system is another significant advantage. Regardless of whether capitalism is morally controversial, the existence of this system is an undeniable fact. The U.S. was founded by a group of tax-evading slave owners who ensured that their capital could continue to appreciate through the Constitution, allowing their descendants to maintain power in both economic and political spheres. Under such a system, undertaking a multi-year large capital investment project, such as drilling for hydrocarbons and mining Bitcoin, is undoubtedly a fitting choice.
Another point is the new advantages brought by the construction of domestic semiconductor factories in the U.S. TSMC (Taiwan Semiconductor) is nearing completion of several state-of-the-art fabs in Arizona. Meanwhile, other semiconductor foundries will also be encouraged to build factories in the U.S. due to government subsidies and tax incentives. This means that Bitcoin ASIC chips (application-specific integrated circuit chips) can be produced domestically in the U.S. Even if the price of Bitcoin rises in the future, leading to a surge in global demand, the U.S. can ensure a sufficient supply of chips without facing shortages.
However, there is a significant challenge: while traditional fiat capital enjoys top-tier policy treatment in the U.S., Bitcoin and other cryptocurrencies have not received the same support. To address this issue, the U.S. needs to provide constitutional protections for Bitcoin and cryptocurrencies. The core principles of Bitcoin miners are decentralization and censorship resistance, but there is currently a possibility that legislators may require miners or node operators to perform some form of censorship. Therefore, public crypto ledgers (such as blockchains) need to be viewed as a protected form of speech. This viewpoint is reasonable, as public blockchains are essentially decentralized networks driven by miners consuming electricity, with an immutable chain of digital speech at their core.
If the U.S. wishes to become the global center for Bitcoin mining, it can achieve this with a bill of fewer than 200 words: "Cryptocurrencies and their tokens operating on blockchain should be regarded as protected forms of speech. All laws applicable to freedom of speech shall also apply to users or intermediaries of public blockchain technology. Cryptocurrencies and public blockchains belong to the private domain, and no government agency may compel intermediaries, participants, or blockchain node operators to collect or provide data about participants and transactions."
If the U.S. has a government that supports energy development, coupled with cryptocurrency legislation that supports permissionless innovation, it can lay a solid foundation for attracting global crypto activity. Energy production and ASIC chip manufacturing require massive capital expenditures (CAPEX), and the U.S. not only has ample capital markets but can also provide legal protections for the operation of peer-to-peer decentralized networks. These conditions will make the U.S. a major concentration of Bitcoin network hash power. Ultimately, "neutral reserve assets" will be produced within the U.S., bringing significant strategic advantages to the U.S. in the global economy.
Once relevant legislation is passed, overturning it will become extremely difficult. Just like many politicians have voiced concerns about the negative impacts of large tech companies and social media, but since the enactment of Section 230 of the Communications Bill in 1996, there has been virtually no substantive progress to repeal this provision. This provision grants tech platforms immunity from liability for content and activities on their networks, and this status is too profitable for all parties involved. Similar "interest coalitions" may also form between cryptocurrencies and politicians, while providing tangible benefits to those who need high-paying jobs and tax growth.
The Rise of Holders
If Bessent can successfully push Bitcoin prices above $1.8 million, a group of the wealthiest individuals in human history will emerge. Currently, some of the largest holders of Bitcoin are either U.S. residents or companies registered in the U.S. For example, BlackRock has accumulated nearly 600,000 Bitcoins worth about $60 billion in less than a year since launching its Bitcoin ETF. Given that U.S. political power largely relies on wealth, these Bitcoin holders will be able to exert significant influence over politics. If the Republican Party adopts pro-crypto policies, these holders may become staunch supporters for many years or even decades to come.
For politicians, re-election is their core goal. Aside from Trump, those Republicans who align with his political ideology are likely to be re-elected in 2026 or 2028. By making America's cryptocurrency holders extremely wealthy while further consolidating the dollar's global hegemony, it is undoubtedly one of the best strategies for Republican politicians to ensure re-election.
Global Acceptance of Bitcoin as a Reserve Asset
Will other large trade surplus countries accept Bitcoin as a replacement for Treasury bonds as a reserve asset? The answer is yes.
Assuming Bitcoin's market value is large enough to support trillions of dollars in international trade, Bitcoin has the following significant advantages over Treasury bonds:
- The code of Bitcoin cannot be changed unilaterally.
Bitcoin's decentralized design ensures that no one can unilaterally change its code. Even if some American miners attempt to change the blockchain through a hard fork (Hard Fork), such as excluding certain transactions or modifying Bitcoin's total supply, it would only result in the value of Bitcoin on the new chain dropping to zero, rendering their assets worthless. The economic game theory behind the Bitcoin blockchain ensures that this situation will not occur.
Bitcoin transactions are borderless. As long as there is an internet connection, Bitcoin can be accessed and traded without permission at any time and from anywhere.
Bitcoin is the purest derivative of monetary energy. It can effectively preserve the energy value of trade surpluses over time, making it an ideal reserve asset.
No country, not even China, is willing to take on the role of global reserve currency issuer and allow its bond market to become a global reserve asset. This is because this role naturally requires an open capital account, and when a country stops producing actual goods and turns to financial engineering, most ordinary people will face severe adverse effects. This is clearly contrary to the idea of "common prosperity." Therefore, an improved system might be: continue using dollars for trade or allow the exchange of bilateral local currencies, but store trade surpluses in Bitcoin. This system benefits everyone… except those "too big to fail" traditional financial institutions (TradFi). These institutions will have to face the gradual decline of their power and prestige, while the influence of decentralized finance (DeFi) will continue to grow.
The Right Wish
Stacking Bitcoin (Stacking sats) is my hobby, and I hope it is yours too. So if you have the chance to sit at the "genie's table" dressed to the nines, make sure you make the right wish.
Postscript: The Naivety and Reality of the Cryptocurrency Circle
People in the cryptocurrency circle are often the smartest group in the world, yet also the most naive. And Trump is giving them a crash course in politics.
The price of Bitcoin skyrocketed from $70,000 to $110,000 in less than 60 days, a phenomenon driven by the widespread belief in the cryptocurrency circle that all their wishes would be fulfilled within the framework of Pax Americana. However, there is a critical flaw in this thinking: in any bilateral value exchange, the rational choice is to receive the goods before making payment. Yet Trump and the Republicans clearly took what they wanted from the cryptocurrency circle first—enough votes to win the presidency and secure a party majority in both the House and Senate. Now it is their turn to "pay," but their timeline is clearly very different from the urgent mindset of us "speculative maniacs" who are fixated on minute-by-minute candlestick charts.
Trump is currently forming working groups and Senate subcommittees but has not taken any concrete action. When Trump truly wants to act, he executes swiftly. For example, he imposed a 25% tariff on America's largest trading partner, taking only a few days from announcement to implementation; he quickly abolished ESG (Environmental, Social, and Governance) and DEI (Diversity, Equity, and Inclusion) policies in government agencies. These examples indicate that Trump is not unwilling to take proactive action for cryptocurrencies; rather, it shows that cryptocurrency regulation or the Bitcoin Strategic Reserve is not his or the Republican Party's top priority. This is unfortunate because, marginally, the single-issue voters for cryptocurrency are the key force that brought them to power.
Will Bitcoin Prices Fall Back?
As the world gradually realizes that U.S. politics has not fundamentally changed due to Trump's election, cryptocurrency prices may fall back to levels seen in the fourth quarter of 2024. I still stand by my prediction that Bitcoin will retest the $70,000 to $75,000 range.
How Can the Cryptocurrency Market Recover from Its Slump?
To revive the market, several scenarios may need to occur: the Federal Reserve, U.S. Treasury, or institutions like China or Japan may introduce some form of monetary easing policy, or clear legislation supporting permissionless crypto innovation may be enacted. However, if this legislation is pieced together like "Frankenstein," merely catering to the interests of Coinbase, BlackRock, and traditional stock investors, it will neither drive the market to new heights nor achieve the goal of "decentralizing everything" for us crypto enthusiasts (crypto degens). Such legislation would not only deviate from the ideals of cryptocurrency but also offend the "spirit of decentralization," with consequences that will be swift and severe.
Take Action and Speak Up for the Future of Crypto
Nevertheless, we still have hope. If you are a cryptocurrency holder (Hodler) in the U.S., now is the time to take action! Let your elected representatives know that you will not tolerate the status quo in politics. Email them, write letters, or visit their local offices in person. Politicians typically respond to those who care about policy. If you believe establishing a Bitcoin Strategic Reserve is necessary, now is the time to speak out, rather than just liking a comment on X platform (formerly Twitter).
The problem is that digital devices allow us to express our anger freely in our echo chambers, but they rarely prompt us to take real action in the real world. And in fact, everything you truly value is obtained through some effort and cost. There is no "easy button" on the political road for cryptocurrencies—open your eyes and take action, or the market may continue to decline.
