CryptoQuant CEO Ki Young Ju believes the US could feasibly offset a portion of its national debt by establishing a strategic Bitcoin (BTC) reserve, a move he describes as practical but politically challenging.
Ki shared the analysis in a social media post on Dec. 25, where he highlighted that $790 billion in capital inflows have propelled Bitcoin’s market cap to $2 trillion over the past 15 years. He added that this year alone, $352 billion in inflows contributed to $1 trillion in added market cap.
Despite the feasibility of the move, implementing it poses several challenges. Ki stated:
“However, using a pumpable asset like Bitcoin to offset dollar-denominated debt — rather than gold or dollars — could make gaining creditors’ consensus challenging.”
Bitcoin reserve
Analysts believe that using a volatile asset like Bitcoin instead of traditional reserves like gold or the US dollar could complicate creditor relations. Bitcoin’s price history shows significant fluctuations, with notable peaks and troughs, raising questions about its suitability as a stable reserve.
However, they also argue that establishing a Strategic Bitcoin Reserve (SBR) could serve as a symbolic initial step toward achieving broader acceptance.
Ki highlighted that offsetting 36% of domestically held US debt by acquiring 1 million Bitcoin by 2050 could be feasible if the US government classifies Bitcoin as a strategic asset. This represents a shift in thinking about debt management, potentially reducing the nation’s reliance on inflationary monetary policies.
The remaining 30% of debt held by foreign creditors may resist such a strategy. However, analysts emphasized that the approach does not depend on fully settling the national debt with Bitcoin, which could enhance its practicality.
Economic buffer
Matthew Sigel, head of digital asset research at VanEck, explored the proposal further, calculating the potential for the US Treasury to accumulate 1 million Bitcoin over a five-year period, starting at a price of $200,000 per coin.
Sigel’s analysis indicates that Bitcoin price growth could significantly impact the value of reserves relative to the national debt by 2049. The analysis suggests that under favorable growth conditions, the reserve could cover a substantial portion of the debt, creating a novel economic buffer against future liabilities.
While speculative, the concept highlights growing interest in alternative strategies for managing national debt through digital assets as the crypto market matures. Proponents argue that Bitcoin’s decentralized nature and scarcity could position it as a hedge against inflation, potentially offering long-term financial stability.
Still, widespread adoption would require regulatory clarity and international cooperation to ensure Bitcoin’s seamless integration into national reserves.