RFK Jr. wants the U.S. Treasury to buy $4M worth of Bitcoin. Here's why it might be a good idea.
The 2024 presidential election is gearing up to be a showdown between the Democratic Party's nominee, Vice President Kamala Harris, and the Republican Party's nominee, former President Donald Trump. However, somewhere in the background lingers another candidate: Robert F. Kennedy Jr., who is running as an independent.
As of now, predictive analytics tracker Polymarket is only giving Kennedy a 1% chance to win the presidency. Yet, RFK Jr. continues to find ways to pique interest among voters.
Recently, Kennedy unveiled some ideas he has about cryptocurrency. Although his odds of winning in November are very low, I think RFK's crypto views should be taken seriously.
What did RFK Jr. say about Bitcoin?
Last month, RFK Jr. headlined the Bitcoin 2024 conference in Nashville, Tennessee.
During his keynote speech last month, Kennedy said that if he becomes president, he would direct the U.S. Treasury to buy 550 Bitcoin (CRYPTO: BTC) per day until a reserve of at least 4 million Bitcoins had been aquired.
Although some may think such an idea is far-fetched, I actually see some merit in RFK's reasoning. Let's explore what makes Bitcoin valuable compared to other cryptocurrencies.
What makes Bitcoin unique?
Bitcoin is unique for several reasons. Unlike dollars and coins, Bitcoin cannot be physically held. Rather, it is a digital currency that can be purchased on exchanges such as Coinbase or Robinhood, and it can also be acquired through a process called mining.
According to RFK, an aggressive purchase plan of Bitcoin could influence the price of the crypto asset to eventually reach "hundreds of trillions of dollars."
While I can't say definitively if that valuation is reasonable, I understand why RFK thinks Bitcoin's price could change dramatically. Similar to stocks, the price of Bitcoin is determined by the dynamics of supply and demand.
Considering there is only a total potential supply of 21 million Bitcoins, the crypto is generally seen as scarce and sometimes is referred to as digital gold.
Owning 4 million Bitcoin would represent a significant portion of the total supply and could give the U.S. some leverage as it relates to the price of the crypto.
Why should the U.S. Treasury invest in Bitcoin?
For now, cryptocurrency is still generally considered to be a speculative investment, given that it is unregulated and has a limited real-world utility.
However, the Securities and Exchange Commission (SEC) in January approved a number of spot Bitcoin exchange-traded funds — suggesting that the U.S. government and institutional investors alike are at least beginning to warm up to the crypto.
Personally, I don't think building a position in Bitcoin is such an outlandish idea for the U.S. government. The Treasury already owns alternative assets, such as gold. So, to me, an allocation toward Bitcoin simply represents another layer of diversification.
At its current price of about $61,000, 4 million Bitcoins would cost the Treasury about $244 billion. While this is certainly a non-trivial amount of money, the Department of the Treasury has budget resources in excess of $3.8 trillion, according to USASpending.gov.
Moreover, I think it's plausible that other governments around the world could become increasingly interested in cryptocurrency should the U.S. Treasury build a healthy position in Bitcoin. As a result, a higher level of engagement from major government institutions could quickly influence the value of Bitcoin.
Furthermore, differentiating the U.S.'s financial horsepower in such a unique way could potentially have an impact on more serious topics such as foreign policy and trade negotiations as well.
For these reasons, I think owning Bitcoin carries more upside and is a savvy way to move forward in an ever-changing and sophisticated financial system.
Adam Spatacco has positions in Coinbase Global. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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