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US states are introducing Bitcoin reserve bills, fueling speculation about a global accumulation race as institutions and governments adopt BTC as a reserve asset.
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The growing number of Bitcoin reserve proposals in the United States has fueled speculation about a potential global accumulation race, as early adopters could benefit from the cryptocurrency’s monetary incentives.
Kentucky became the 16th US state to introduce legislation aimed at establishing a Bitcoin (BTC) reserve that would allocate up to 10% of excess state reserves into digital assets, Cointelegraph reported on Feb. 6.
Bitcoin is on track to “becoming a mainstream reserve asset” thanks to growing institutional and national-level adoption, according to Isaac Joshua CEO of crypto startup platform Gems Launchpad.
If the Kentucky bill is approved, it may trigger a “global race” to accumulate Bitcoin, Joshua told Cointelegraph, adding:
“The tipping point will be when one state formally adopts BTC in reserves. After that, it’s game on, most likely. Once a few actually commit, the others will feel the pressure to follow.”
“We expect to see many portfolios reposition their diverse allocation strategy to include BTC before the big players eat up all the supply,” he added.
Some of the world’s largest asset management companies have already accumulated over 5.91% of the current BTC supply through the US spot Bitcoin exchange-traded funds (ETFs) which hold a cumulative $113.5 billion Bitcoin, Dune data shows.
Bitcoin ETFs cumulative holdings. Source: Dune
BlackRock’s Bitcoin ETF accounts for over 48.7%, or $55.3 billion of the cumulative holdings of all US spot Bitcoin ETFs.
Continued Bitcoin ETF inflows may push Bitcoin to a new all-time high. In 2024, US Bitcoin ETFs accounted for about 75% of new investment into BTC when it recaptured the $50,000 mark on Feb. 15.
Related: BlackRock increases stake in Michael Saylor’s Strategy to 5%
Bitcoin reserve presents regulatory, volatility concerns
Despite increasingly more Bitcoin reserve bills being issued, regulatory challenges remain a hurdle, according to James Wo, the founder and CEO of venture capital firm DFG.
“The idea of an accumulation race is fascinating, but this bill is merely a proposal and has not yet been passed,” Wo told Cointelegraph, adding:
“While other states may follow suit, strict fiscal policies and concerns over Bitcoin’s volatility could pose challenges for legislators and the public. However, if enough states successfully pass similar bills, it could lay the groundwork for a broader conversation about a federal Bitcoin reserve in the future.”
US states with Bitcoin reserve bill propositions. Source: Bitcoinlaws
Kentucky became the 16th state in the US to introduce legislation for a Bitcoin reserve, following Arizona, Alabama, Florida, Massachusets, Missouri, New Hampshire, North Dakota, South Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Kansas and Wyoming.
Related: Bitcoin creator Satoshi Nakamoto may be wealthier than Bill Gates
Highlighting Bitcoin’s heightened volatility, the 2022 bear market saw a 64% correction while Bitcoin retraced over 73% during 2018, TradingView data shows.
Bitcoin all-time chart, yearly. Source: TradingView / Cointelegraph
However, Bitcoin averaged over 1,077% returns over the past five years, showcasing the lucrative potential of a long-term holding strategy.
This is partly why institutions, such as the University of Austin, are adopting a minimum five-year Bitcoin holding strategy for their BTC funds, to minimize volatility risks.
Illinois’ Bitcoin reserve bill also proposes a five-year Bitcoin holding strategy, according to House Bill 1844 introduced by Illinois State Representative John Cabello.
Magazine: BTC above $150K is ‘speculative fever,’ SAB 121 canceled, and more: Hodlers Digest, Jan. 19 – 25
This article first appeared at Cointelegraph.com News
