Author | Alex Xu

In this issue, we will focus on the progress of the U.S. Bitcoin Reserve Bill.

The Bitcoin Reserve Bill is currently advancing on two fronts: the state-level Bitcoin Reserve Bills and the federal-level Bitcoin Reserve Bill.

Approximately 25 state governments have already introduced Bitcoin Reserve Bills, which accounts for half of all states, while the federal-level reserve bill has been in preparation since last year and is currently in the hearing phase.

The Bitcoin Reserve Bill, which would include BTC in the asset reserves of major governments, is a key narrative supporting the long-term bullish outlook on BTC. It would not only attract U.S. government funds but also influence reserve decisions in other countries.

For example, the Czech National Bank Governor has considered adding BTC to national reserves. Last year, Japan’s Prime Minister Shigeru Ishiba responded to Senator Akira Hamada, who proposed evaluating Bitcoin for national reserves, stating that Japan is not currently considering it, partly because “the U.S. Bitcoin reserves are still under discussion.”

If the U.S. Bitcoin Reserve Bill makes significant progress, it will undoubtedly impact the decisions of other countries, investment institutions, and sovereign funds.

So, what is the current status of the Bitcoin Reserve Bill in the U.S.?

Based on the current situation, I am not optimistic.

At the state level, among the states that have proposed Bitcoin Reserve Bills, four states have either rejected or denied their bills: Montana, North Dakota, South Dakota, and Ohio. Additionally, Mike Cabell, a Pennsylvania legislator who proposed the Bitcoin Reserve Bill last November, lost his seat shortly after introducing the bill, meaning that the Bitcoin bill in that state will not progress (unless someone else reintroduces it).

Notably, the four states that rejected the reserve bills (Montana, North Dakota, South Dakota, and Ohio) are all solidly Republican red states. Ohio, in particular, is the home state of Cynthia Lummis, a federal senator and the leading proponent of the national Bitcoin Reserve Bill, and this state has always been very friendly to the cryptocurrency industry (including mining, crypto payments, staking, and stablecoins).

Specifically, the reasons for the setbacks of the Bitcoin Reserve Bill in these four states vary. Typically, for a Bitcoin Reserve Bill to be officially passed, aside from the preparatory stage, it must go through three main stages:

1. A review and vote by a specialized committee in the House of Representatives, followed by a full House vote (in some states, the Senate votes first);

2. A review and vote by a specialized committee in the Senate, followed by a full Senate vote;

3. Signature by the executive (governor or president) for the bill to take effect.

In this case, Montana and North Dakota reached the House voting stage and were rejected; Ohio and South Dakota were denied at the specialized committee stage, without even reaching the formal parliamentary voting stage.

Regarding the reasons for rejection, the attitude of Patrick Fleming, a member of Ohio’s specialized committee and the Chief Investment Officer of the state treasury, is quite representative. He is also a supporter of cryptocurrency, and his explanation for voting against the bill was: “Bitcoin has been one of the best investments over the past decade. It is simply a leap forward. But when you look at its volatility, like in 2021, it dropped 77%, which are precisely the things we do not want to see in our investment portfolio.”

In other words, as an individual investor, Patrick Fleming believes in Bitcoin, but as a state investment officer, he considers the excessive volatility of BTC to be unsuitable for state financial investments at this time.

It is clear that passing the Bitcoin Reserve Bill in states governed by the highly pro-crypto Republican Party faces significant challenges. Achieving passage at the federal level, where the legislative dynamics are more balanced and negotiations are more complex, is even more daunting.

Moreover, if the Bitcoin Reserve Bill faces substantial rejections at the state level, the decisions made by state legislators will inevitably influence the views of federal lawmakers, causing those who were initially considering supporting the national reserve bill to waver.

It can only be said that the progress of Bitcoin entering the asset reserves of major governments is far less smooth than many in the cryptocurrency industry anticipated. Recently, the well-known crypto investment firm VanEck predicted that the passage of Bitcoin Reserve Bills in over 20 states would bring more than $20 billion in buying power to BTC.

The analysis by VanEck’s analysts regarding the purchasing power of state reserves can be found at: @matthew_sigel.

Currently, this prediction certainly seems overly optimistic, not only because it is uncertain whether these states will quickly start purchasing after passing the bills, but also because it is still unknown how many states will ultimately manage to pass the bills.

So, does this mean that the Bitcoin Reserve Bill, considered the biggest catalyst for this BTC bull market, is losing its appeal? Is there no hope left for this round of the BTC bull market?

Perhaps not entirely.

Despite the setbacks faced by four states plus Pennsylvania, there are also some states making good progress with their bills. For instance, Utah (currently the fastest-moving state) has not only had its bill pass the specialized committee vote but has also passed the House vote and the Senate committee review. Additionally, reserve proposals from Arizona and Oklahoma have also passed the House specialized committee vote and are about to enter the full House voting stage, with Oklahoma’s vote expected to yield results shortly.

If subsequent progress in states like Utah, Oklahoma, and Arizona goes smoothly, and they successfully enact legislation, it will undoubtedly boost the confidence of other lawmakers, including those at the federal level and in other countries.

Furthermore, even without considering the passage of the national Bitcoin Reserve Bill, the fundamental improvements of BTC in this cycle are significantly better than in the previous cycle. In the last cycle, the fundamental improvements of BTC were lackluster, with notable events possibly limited to Tesla’s purchase of BTC (which was later partially sold) and the so-called narrative of “institutional long bull” driven by Grayscale Trust. In contrast, the fundamental improvements in this cycle are much larger and include:

● The approval of the Bitcoin spot ETF, which has become the fastest-growing ETF in history.

● Bitcoin entering the balance sheets of numerous publicly listed companies and investment institutions. According to new accounting standards effective January 25, BTC can now be priced at fair value in financial reports, changing the previous situation where holding BTC could not reflect investment appreciation in financial reports after price increases.

● Sovereign funds beginning to purchase BTC, with the second-largest sovereign fund globally, the Abu Dhabi sovereign fund, officially disclosing its BTC holdings.

● The presence of the most crypto-friendly government and regulatory bodies in history, referring specifically to the United States.

Additionally, unlike the previous cycle where various narratives and domains such as DeFi, L1, GameFi, NFT, and Meme flourished while public discourse heavily emphasized “ETH flip BTC,” leading to a serious diversion of attention and funds away from BTC, this cycle has seen other domains languishing, with BTC being almost the only cryptocurrency asset with significant fundamental improvements. This has resulted in the remarkable phenomenon of BTC’s market share steadily increasing throughout this bull market.

BTC’s market share trends from 2022 to present, source: Tradingview.

In this cycle, given the clear improvements in BTC’s fundamentals and comparative advantages over the last cycle, the peak price of BTC ($109,000) represents only a 58% increase compared to the previous cycle’s peak price ($69,000), whereas the previous peak price relative to the cycle’s highest price in 2017 ($20,000) saw a 245% increase.

Of course, as BTC’s market capitalization grows, the percentage increase in each cycle will almost inevitably diminish, but referencing the fundamental conditions of the two cycles, can we really say that this cycle’s BTC growth of only 58% is justified?

Facing the same facts and data, everyone has different opinions, and perspectives may vary.

Moving forward, I will be paying close attention to the specific progress of the Bitcoin Reserve Bills in several key states, including Utah (where results from the Senate vote are expected in March, and if successful, it will become the first state to pass Bitcoin reserve legislation), Oklahoma (where results from the House vote are expected soon), Arizona, Texas, and others.

Follow us
Twitter: https://twitter.com/WuBlockchain
Telegram: https://t.me/wublockchainenglish