Bloomberg, one of America’s leading sources of business and financial news, has taken aim at Bitcoin and its proposed strategic reserve. In an opinion published on December 9 this year. Bloomberg’s editorial team posed a grave political question: Does the government need a Bitcoin strategic reserve?

For this news organization, the answer is “no,” arguing that the U.S. government does not have to approve the proposal and calling it “the biggest scam yet in the cryptocurrency industry.”

The value of the world’s largest digital asset has increased by more than 50% since November 4 and exceeded $100,000 a few days ago. This is the latest Bitcoin price the run has inspired cryptocurrency enthusiasts and leading industry figures to renew calls for Bitcoin’s legitimization as a financial asset and its inclusion in the national reserve as a potential hedge against inflation.

Bitcoin as a purely speculative asset with no other purpose?

The U.S. government maintains various strategic reserves, including oil, as part of its Strategic Petroleum Reserve (SPR). These are believed to be the country’s emergency oil reserves and currently the largest in the world. The U.S. government began this program in 1975 to anticipate future supply disruptions.

Image grab/Source: Bloomberg

According to a Bloomberg editorial, oil is the country’s strategic reserve. The U.S. government maintains a reserve to ensure a steady supply of oil, and the Federal Reserve buys and sells oil to support jobs, low inflation, and manage the financial system.

Buying Bitcoin and adding it to the national reserve, according to Bitcoin, does not serve the same purpose. The editorial points out that buying and holding BTC has no industrial application or real connection to the economy. In tiny, Bloomberg’s editorial team calls Bitcoin a “purely speculative asset” whose price is based on what a “greater fool” is willing to pay.

I didn’t expect this from the Bloomberg Editorial Team, but I can’t disagree:

“Buying Bitcoin with taxpayers’ money would serve no public purpose. It has no industrial application, no claim to real cash flows, no connection to the real economy. This is a purely speculative instrument.…

— Samantha LaDuc (@SamanthaLaDuc) December 10, 2024

Government Risks in Investing in Bitcoin

As a speculative asset, Bloomberg opinion fragment he gave several warnings. Bloomberg continues that by buying these assets, the government is just wasting money. The article further explains that if the government follows through with its plan, it will only boost the national debt or create fresh money, which will boost inflation and affect the US dollar.

And since the world’s largest digital asset is purely speculative and has no intrinsic value, the likelihood is that it “Bitcoin Reserve” may soon become worthless. Bloomberg also warns that adopting BTC as a reserve could impact the country’s economy and financial structure.

BTC can benefit several holders, investors

According to Bloomberg, banks and other financial institutions may also suffer from the planned arrangement. If they accept BTC as collateral, it could depress the price of the asset, leading to a financial collapse or even a bailout. Bloomberg says Bitcoin adoption in the financial sector is risky.

The editorial team is quick to note that while the public and banks may suffer, several bondholders will benefit from the plan. Bloomberg argues that existing bondholders and early adopters will get richer from this program, while the government (and the general public) will become “more of a fool.”

Featured image from Reuters, chart from TradingView