We’ve Dipped Back Below $100,000, But the Bitcoin Arms Race Is On

First of all, Happy New Year! 

I hope 2024 was awesome for you and that 2025 will be even better.

If you’ve had Bitcoin in your Christmas stockings, you’ll probably know that we’ve hit another all-time high in December. 

$108,135 for one Bitcoin, to be exact. 

But the party didn’t last long–we dropped back down to the low-$90,000s towards the end of the month. 

Volatility is nothing new to bull markets (or any time to a Bitcoin holder), so this isn’t anything out of the ordinary. 

What is out of the ordinary, though, is that countries around the globe are seemingly preparing for a Bitcoin “arms race” as Bitcoin Game Theory is playing out in front of our eyes. 

Let’s talk about all of that!

A new all-time-high and a dip 📉 

On December 17, Bitcoin reached another new all-time high of $108,135. 

However, the enthusiasm didn’t last long. 

After the Fed’s 25 basis point cut on December 18, which came with a side of hawkish tones from Fed Chairman Jerome Powell, the December rally was over. 

The price of Bitcoin dropped below $100,000 and even went as low as $91,500 before recovering back to the mid $90,000 to close out the year. 

This is nothing new. In every bull market, we see drawdowns like this. 

Whatever the reasons were that made investors sell BTC, I am confident that a new all-time high is just around the corner. 

Why? 

Because Bitcoin has never been in a better place than it is now. 

Wall Street is buying Bitcoin.

Main Street is buying Bitcoin. 

Corporations are buying Bitcoin. 

And by the looks of it, more nation-states are (about to start) buying Bitcoin. 

The Bitcoin arms race has begun 🏎️

We’re less than a month away from President Trump’s inauguration on January 20. 

He’s been very vocal about a strategic Bitcoin reserve and has great people around him in the upcoming administration who understand the immense potential.

Not only will the strategic Bitcoin reserve have a big impact on the U.S., but it will also be the start of the arms race for nation-states to set up strategic Bitcoin reserves. 

Whatever the U.S. does is a great indicator of what other countries will do next. The U.S. also has the advantage of having the world’s reserve currency. 

If the Trump administration goes ahead and aggressively accumulates Bitcoin, other nations will need to react as well. 

And we already see hints of this on other continents. 

Russia’s finance minister announced this month that they already use Bitcoin in foreign trade. 

A Hong Kong legislator proposed leveraging the special administrative region’s “one country, two systems” policy to add Bitcoin to its treasury. 

In Brazil, we saw a legislative proposal by a congressman to set up a strategic reserve and follow the U.S.’s lead. 

We’re seeing the same picture in Europe, where Swiss, French, and German politicians have proposed holding Bitcoin as reserves. 

While most of these initiatives are being brought forward by individuals, if the U.S. Bitcoin reserve becomes a reality, all of these countries will need to follow as well. 

Otherwise, they will be left behind economically and will (eventually) have to explain to their voters why they didn’t act sooner. 

Nation-state Bitcoin buying could fundamentally change the Bitcoin market 🌍

Based on the likely scenario of the U.S. and other nations adopting Bitcoin as a strategic reserve, I also make the case for a massive shift in the crypto ecosystem. 

Right now, we have the likes of BlackRock, Fidelity, basically half of Wall Street, and public companies like MicroStrategy accumulating Bitcoin at an impressive rate.

However, if you compare their numbers to the amount of money nation-states have on hand, things start to get really interesting. 

Once nations get on board, you could see a constant inflow of capital into Bitcoin. 

All of these reserves are not the same as those of an investor who might hold shares in spot Bitcoin ETFs because he wants a decent return, but rather, as the name suggests, it’s a long-term investment. 

Additionally, there will be the first movers. Currently, it will likely be the U.S. that strikes first among the world’s largest economies. 

After that, countries like Germany, Russia, and China will probably follow next.

Once the first movers are done with their initial purchases, other nations will likely also get on board.

There will be a constant flow of money into Bitcoin, and the sheer amounts will be something else. 

Let’s not forget the ongoing adoption among institutions on Wall Street. That will likely increase even more once nation-states start buying in bulk. 

And there is one more thing most people overlook. If nations adopt Bitcoin, it will help public perception. So, long gone will be the days when we will read about Bitcoin’s death. 

Such an influx of capital could go as far as putting an end to the crypto winter-esque bear markets we’ve gotten used to in this space. 

The more the world adopts Bitcoin as a reserve currency, the less likely it is that we will see immense volatility. 

How Bitcoin’s rise impacts modern governance and wealth management 💪

One aspect many analysts and financial experts overlook when it comes to Bitcoin is that it’s much more than the price we see on the screen. It can potentially change the financial world and impact modern governance and wealth management.

In my latest episode of the Proof of Words podcast, I spoke about these topics with Aleksandar Svetski, author of The Bushido of Bitcoin and founder of Satlantis. We also went much further and took a close look at some of the philosophical aspects of Bitcoin.

Tune in here to watch the full episode!

Your fellow stacker in sats, 

Patrick Lowry