Amid growing speculation that incoming President Donald Trump may sign an executive order declaring a Bitcoin Reserve on his first day in office, or pass legislation to establish such a reserve during his term, many are wondering if this move could trigger a crypto supercycle.
Since Wyoming Senator Cynthia Lummis introduced the Bitcoin Reserve Act earlier this year, states like Texas and Pennsylvania have filed similar proposals. Russia, Thailand, and Germany are reportedly considering their own proposals, further intensifying the pressure.
If governments are competing to secure their own Bitcoin stockpiles, could this signal the end of the four-year boom-bust cycle in crypto prices, which many attribute to Bitcoin’s halving?
Iliya Kalchev, a dispatch analyst at the crypto lender Nexo, believes that “the Bitcoin Reserve Act could be a landmark moment for Bitcoin, signaling its recognition as a legitimate global financial instrument.” He further notes, “Every Bitcoin cycle has a narrative pushing the idea that ‘this one is different.’ The conditions have never been so ideal. Crypto has never had a pro-crypto US President who controls both the Senate and Congress.”
Lummis’ proposed Bitcoin Act 2024 would allow the US government to add Bitcoin (BTC) to its treasury as a reserve asset by purchasing 200,000 BTC annually over five years, eventually accumulating 1 million Bitcoin, which it would hold for at least 20 years.
Jack Mallers, founder and CEO of Strike, believes Trump has the “potential to use a day-one executive order to purchase Bitcoin,” though he cautioned that this would not necessarily equate to a 1 million Bitcoin purchase.
Dennis Porter, co-founder of the nonprofit organization Satoshi Act Fund, which supports pro-Bitcoin US policy bills, also believes Trump is exploring the possibility of enabling a strategic Bitcoin reserve via an executive order.
So far, Trump’s team has not directly confirmed claims regarding an Executive Order, but Trump was asked on CNBC if the US would create a BTC Reserve similar to its oil reserve (which could mean legislation), and he answered, “Yes, I think so.”
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An Executive Order, however, would lack stability, as subsequent presidents often reverse such orders. The only way to ensure the long-term future of a strategic Bitcoin reserve would be through legislation with majority support.
Bitcoin advocates on Trump’s team have solid grounds to push Lummis’ bill, as Republicans dominate Congress and hold a slim majority in the Senate. However, just a few Republican defectors, swayed by progressive outrage over supposedly handing government wealth to Bitcoiners, could derail the bill.
**‘Stop comparing this cycle to prior cycles’**
Earlier this month, Alex Krüger, economist and founder of macro digital assets advisory firm Asgard Markets, stated that the election result led him to believe that “Bitcoin is highly likely to be in a supercycle.” He compared Bitcoin’s unique situation to gold, which surged from $35 per ounce in 1971 to $850 in 1981 when former US President Richard Nixon ended the gold standard and Bretton Woods.
Krüger did not rule out the possibility of Bitcoin undergoing a bear market as in previous cycles. However, he urged crypto investors to “stop comparing this cycle to prior cycles,” as it could be different this time.
Trump’s actions so far suggest a favorable administration ahead. He has nominated pro-crypto and pro-deregulation Paul Atkins as a nominee for the Securities and Exchange Commission (SEC) Chair following Gary Gensler’s resignation. He has also nominated pro-crypto Scott Bessent as Treasury Secretary and appointed former PayPal COO David Sacks as AI and Crypto Czar, tasked with developing a clear legal framework for the crypto industry.
**Supercycle theory has never had super results**
However, the notion of “this cycle being different” has emerged during every past Bitcoin bull market, each time supported by narratives surrounding mainstream and institutional adoption.
During the 2013-2014 bull run, the supercycle theory was bolstered by the idea that Bitcoin would gain international interest as an alternative asset to fiat currencies.
In the 2017-2018 cycle, rapid price appreciation was viewed as a sign of mainstream financial adoption and the beginning of Bitcoin’s acceptance, where institutional interest would thrive.
In the 2020-2021 cycle, when tech companies like MicroStrategy, Square, and Tesla entered the Bitcoin market, many believed other tech-related companies would follow suit.
However, in each cycle, the supercycle narrative was unfulfilled, ending in a price crash that wiped out proponents as Bitcoin entered a prolonged bear market.
Su Zhu, co-founder of Three Arrows Capital, was the most notable proponent of the Supercycle Thesis in 2021, arguing that crypto markets would remain in a bull market without a sustained bear market, with Bitcoin eventually peaking at $5 million.
3AC certainly borrowed money as if the supercycle thesis was real, and when it was eventually liquidated, the crypto market cap fell by almost 50%. The collapse led to bankruptcies and financial difficulties for lenders including Voyager Digital, Genesis Trading, and BlockFi.
Therefore, a supercycle is a risky theory to bet your life savings on.
For Chris Brunsike, partner at venture capital firm Placeholder and former blockchain products lead at ARK Invest, the Bitcoin supercycle is a myth.
Nevertheless, the US election results have overwhelmingly created unprecedented and extremely bullish conditions for Bitcoin, considering the backing of a US President who seems to be following through with his pro-crypto promises, among them never selling Bitcoin from the US Bitcoin stockpile.
**The potential global domino effect**
If the Bitcoin Reserve Act is passed, it may trigger a global “hodling” race, as other countries may follow suit to avoid being left behind.
George S. Georgiades, a lawyer who transitioned from advising Wall Street firms on capital raising to working with the crypto industry in 2016, told Cointelegraph that enacting the Bitcoin Reserve Act “would mark a turning point for global Bitcoin adoption” and likely “trigger other countries and private institutions to follow suit, driving broader adoption and enhancing market liquidity.”
Basel Ismail, CEO of crypto investment analytics platform Blockcircle, agreed, saying that approval would be “one of the most bullish events in crypto history,” as it would “catalyze a race to acquire as much Bitcoin as possible.”
“Other nations won’t have a voice; their hand will be forced. Pivot and compete, or die.”
He believes that “most of the G20 nations, the most powerful and economically advanced countries in the world, would follow suit and create their own reserve stash.”
2024 G20 map. Red: G20, Purple: EU-represented countries, Green: African Union-represented countries. Yellow: Countries permanently invited. Source: Wikipedia
Veteran crypto investor and Bitcoin educator Chris Dunn told Cointelegraph that such a FOMO-driven competitive buying spree among countries could completely alter the current crypto market cycle.
“If the US or another major economic power started accumulating Bitcoin, it could trigger a FOMO effect, creating a market cycle and supply-demand dynamics unlike anything we’ve seen before.”
Hong Fang, OKX exchange President, also mentioned that other countries may already be positioning themselves for such a race.
“Game theory is likely already quietly in play.”
However, Ismail stated that much of the Bitcoin purchasing will likely be done through over-the-counter brokers and settled as block trades, meaning “it may not have an immediate, direct impact on the price of BTC,” but will instead create a long-lasting demand force that will eventually push the price of Bitcoin upwards.
**The new wave of crypto investors may alter crypto market dynamics**
The Bitcoin market could undergo a radical transformation if states become market buyers. A new wave of investors from global financial centers could flood the crypto markets, altering market dynamics, psychology, and reactions to certain events.
While it remains speculative to assume this legislation could disrupt Bitcoin’s well-known four-year halving cycles, several dynamics might evolve, according to Nexo analyst Kalchev.
Bitcoin is a unique market, historically driven by retail buying and selling, with its price highly reactive to market psychology. The emergence of new types of investors could shift market dynamics and alter historical cycles.
Ismail believes that “investors from the equities market will behave differently” than hyper-reactive retail investors. Institutional players bring deep pockets and advanced risk management strategies, which allow them to approach Bitcoin differently than retail investors.
“Over time, Wall Street’s participation could contribute to a more stable, less reactive market environment.”
Stabilization could also mean less volatility, which logically suggests that bear markets would be less aggressive than in past cycles.
Georgiades believes that “price cycles will persist,” but “sustained demand from large-scale buyers like the US could reduce volatility and the swings we’ve witnessed over past cycles.”
Ismail, meanwhile, pointed out that the Bitcoin market is already behaving differently than in previous four-year cycles. Bitcoin’s price in the current cycle fell below the last cycle’s all-time high (ATH), “which everyone believed was impossible,” before reaching a new ATH even before the formal halving occurred.
“The four-year cycle has already been debunked and broken multiple times now.”
Bitcoin has only seen four halvings so far, with nearly thirty halving events yet to occur. “It’s difficult to imagine that all these halvings will follow the same predictable four-year pattern,” said Kalchev, especially as broader macroeconomic and political factors—such as central bank policies and regulatory developments—exert more significant influence on Bitcoin’s market trajectory.
Kalchev believes that Bitcoin’s price movements will become less tied to internal mechanics like the halving and more influenced by external factors, such as institutional adoption and geopolitical events.