Recent comments from US Treasury Secretary Scott Bessent regarding the Strategic Bitcoin Reserve have led to significant fluctuations in the cryptocurrency's price.
Treasury Secretary's Statement
During a Fox Business interview, Scott Bessent stated that the Treasury would not be purchasing Bitcoin for its strategic reserves, causing Bitcoin to drop to a low of $117,254. "We're not going to be buying that, but we are going to use confiscated assets and continue to build that up," Bessent said.
Market Reaction
The decline in Bitcoin's price adversely affected long positions, resulting in over $500 million being liquidated. The sentiment worsened following a hotter-than-expected Producer Price Index increase of 0.9% in July, prompting investors to consider potential interest rate increases. After Bessent clarified that the Treasury is exploring budget-neutral paths for Bitcoin acquisition, the price rebounded above $119,000.
Support and Criticism of Bitcoin Reserves
Senator Cynthia Lummis backed Bessent's clarification, suggesting the US could revalue its gold reserves to fund further Bitcoin purchases. "We cannot save our country from $37 trillion debt by purchasing more Bitcoin, but we can revalue gold reserves to today's prices and use the difference to build the reserve," she stated. However, Bitcoin critic Peter Schiff warned that this could necessitate printing more dollars, exacerbating inflation.
The discussions surrounding the establishment of a strategic Bitcoin reserve continue to impact the market, eliciting both support and criticism from experts and politicians alike. The progression of this situation may be pivotal for the cryptocurrency market's future.
