The discussion of the Fed's current position and MicroStrategy's strategy in using Bitcoin raises important questions about the future of traditional finance.
MicroStrategy's Bitcoin Strategy
Analyst Rochard argues that MicroStrategy’s approach resembles 'full reserve banking,' as the corporate reserves are entirely backed by Bitcoin. The company holds 636,505 BTC, and its treasury has grown more than 580%. This raises questions about the outdated nature of the Fed's fractional reserve system, which pays around 4.5% on bank reserves.
Fed's Refusal to Integrate Bitcoin
Fed Chair Jerome Powell has outright dismissed proposals for the central bank to hold BTC on its balance sheet. He maintains that the law prevents such considerations and has signaled no intention to push for changes. Instead, his focus is on the upcoming September meeting, where traders overwhelmingly expect a rate cut despite inflation running above target.
Market Volatility in Cryptocurrencies
The discussion is further complicated by recent fluctuations in the Bitcoin market. Prices sharply dropped in August after a whale sold 24,000 BTC worth $2.7 billion, though prices have since stabilized around $111,500. Additionally, the Trump administration is proposing deregulation measures and the creation of a U.S. Bitcoin strategic reserve, which could clash with the Fed’s cautious stance.
The question of whether Bitcoin can provide better transparency and stability compared to traditional financial instruments remains open. Nonetheless, it underlines the growing tension between traditional monetary policy and crypto-driven strategies.
