David Edwards
Arthur Hayes, former CEO of BitMEX, has voiced strong opposition to the idea of a U.S. Bitcoin Strategic Reserve (BSR), arguing that such an initiative would introduce market instability rather than long-term financial security. In a Feb. 5 essay, Hayes criticized the belief that government intervention would benefit the crypto industry, warning that policymakers would likely use Bitcoin for political maneuvering rather than sound economic strategy.
Government Control Could Destabilize Bitcoin
Hayes outlines a scenario where a U.S. administration, potentially under Donald Trump, could establish a BSR by purchasing one million Bitcoin—an idea previously floated by Senator Cynthia Lummis. While such a move could initially trigger a price surge, he warns that the effect would be short-lived. Once the government completes its purchases, Bitcoin’s upward momentum would stagnate, leading to uncertainty.
“The market would rightly fear when and how these Bitcoin would be sold,” Hayes cautions, explaining that a future administration, particularly one led by Democrats, could liquidate the reserves as a quick source of liquidity. Because Bitcoin transactions under government control would be dictated by political interests rather than economic fundamentals, the asset’s role as a decentralized hedge could be compromised.
A Different Path: Bitcoin as a Reserve Asset
Instead of direct government stockpiling, Hayes advocates for a gradual integration of Bitcoin into the U.S. financial system. He proposes using Bitcoin as a reserve asset while maintaining the dollar’s dominance in global trade. Additionally, he calls for legal protections ensuring Bitcoin is recognized as a form of free speech, safeguarding miners and blockchain participants from regulatory overreach.
Bitcoin Price Outlook and Regulatory Risks
Despite Trump’s apparent support for crypto, Hayes remains skeptical of significant policy shifts. He predicts Bitcoin could retreat to the $70,000-$75,000 range unless the Federal Reserve or U.S. Treasury implements monetary stimulus or favorable regulatory changes. He urges crypto investors to take an active role in shaping policy, warning that passivity will allow regulatory decisions to be driven by those seeking to maintain centralized financial control.
