How High Would Bitcoin Surge if the U.S. Starts Buying for Its Reserve?
With gold prices surging, the U.S. government now has a unique opportunity to capitalize on this breakout.
👇1-15) The U.S. is absorbing global liquidity as its economic growth remains strong, while many other countries struggle with stagnation. This has led to a rapidly widening divergence between U.S. interest rates and those of the rest of the world. The European Central Bank (ECB) has already begun cutting rates, whereas the Federal Reserve is expected to remain on hold for several months.
👇2-15) As a result, the U.S. dollar is strengthening, which historically puts pressure on commodity prices like gold and Bitcoin. However, in a notable shift, both gold and Bitcoin are rising alongside the dollar, defying conventional market trends. While there has historically been a 13-week lead between global liquidity (money supply) and Bitcoin, we are now seeing a divergence. The decline in liquidity, when measured in U.S. dollars, has been offset by the strength of the dollar itself.
Bitcoin (LHS) vs. Gold (RHS)
👇3-15) Leading up to the December hawkish Fed meeting, gold consolidated, but it is now breaking out decisively. This move is driven not only by fading concerns over U.S. inflation (after the January CPI print) but also by Trump’s threats to impose tariffs on commodities, which are being viewed as a potential demand catalyst for gold.
👇4-15) While some believe Trump’s tariff threats are merely a negotiation tactic, his past actions suggest a clear intent to follow through. Just a few hours ago, reports emerged that he has begun laying out tariffs on Canada and Mexico, with additional tariffs on China also in the works.
👇5-15) Traditionally, tariffs are seen as a drag on economic growth, making them bearish for risk assets. However, markets often experience a "sweet spot" of uncertainty—where traders fear the potential impact of tariffs, but prices remain supported until they are actually implemented and take effect.
👇6-15) This dynamic is evident in gold markets, where traders anticipate that Trump could impose tariffs on raw materials entering the U.S., including gold. As a result, 393 metric tons of gold—valued at approximately $35 billion—have been moved into COMEX vaults in New York since the Trump election, pushing inventory levels up by +75%, the highest since 2022.