ANALYSIS: U.S. Stalls Building Strategic Bitcoin Reserve, Fed's Huge Losses or Delays Implementation

On 9 December, Gavekal revealed that the Bitcoin Act of 2024 would have proposed the creation of a U.S. Strategic Bitcoin Reserve, which would have been funded in part by remittances from the Federal Reserve to the Treasury Department. However, the Fed is currently losing more than $1 billion per week and has accumulated losses of $212 billion.

Even if the Fed returns to profitability in the future, it will need to prioritise filling the huge deficit gap in its balance sheet, a process that could last several years. In the meantime, the Fed will not be able to make normal remittances to the Treasury, which directly affects the funding of the Bitcoin Reserve Programme.

In addition, to ensure the smooth implementation of the bill, the government may have to rely more on proceeds from the Treasury's revaluation and monetisation of gold to support the bitcoin purchase programme.