The One Million Bitcoin Purchase Plan That Everybody Ignored

Senator Cynthia Lummis’ plan to buy one million Bitcoins has met with remarkable market indifference.

Despite the unprecedented scale of the proposal, Bitcoin’s price has been lackluster. This lack of reaction speaks volumes about investor skepticism.

Senator Lummis’ proposal would make the U.S. one of Bitcoin’s largest holders.

The plan calls for buying 200,000 Bitcoin annually for five years, with a 20-year minimum hold requirement.

This would put the government alongside private entities like Michael Saylor’s Strategy, which already holds nearly 500,000 Bitcoin worth about $42 billion at current prices.

The market’s lackluster reaction is especially instructive. Investors are not only dubious but also flatly reject the plan’s short-term prospects.

“The market has not yet caught up to reality,” as one observer put it, suggesting that present pricing might not accurately reflect the possible effects of such significant government expenditure.

Economists too have been sharply critical. Stephen Cecchetti, an economist and professor at Brandeis International Business School called the idea “absurd.” Their skepticism centers on Bitcoin’s fundamental differences from traditional strategic reserves.

The implementation challenges are substantial. The current plan relies on mark-to-market value of gold certificates, which are still valued at 1974 prices. This funding mechanism raises complex questions about taxpayer exposure and potential impacts on the financial system.

Economists warn that using government debt to buy volatile assets could lead to credit rating downgrades and higher borrowing costs.

The political landscape is equally complex. While the administration supports cryptocurrency initiatives, the plan faces opposition from both economists and parts of the crypto community.

This internal split shows worries about government involvement in decentralized assets.

The technical challenges are big. The government needs advanced systems to securely hold and manage these assets. The U.S. Marshals Service has seized about 200,000 Bitcoin. This is worth around $17 billion.

Talking about some hacker magnet.

The market’s response reveals a fundamental understanding that this proposal represents a new approach to cryptocurrency. Unlike traditional strategic reserves designed to ensure access to essential resources, this plan hinges on the assumption of future price appreciation.

As Cecchetti noted, “It’s foolish to purchase risky assets with leverage in the hope of making it easier to repay your debt”.

The White House’s crypto initiative comes at a crucial moment in digital assets’ evolution.

While the administration has taken concrete steps toward greater crypto adoption, including appointing David Sacks as crypto czar and establishing a bicameral working group for crypto regulation, the market’s response suggests investors want substantive regulatory clarity rather than ambitious but uncertain plans.

The proposal faces numerous hurdles, from congressional approval to technical implementation challenges.

The market’s skeptical reaction may prove prescient, as the path from proposal to reality will likely be more complex than anticipated. While the United States may eventually become a significant crypto player, the journey will likely be more gradual and focused on regulatory clarity rather than massive asset purchases.

The proposal’s fate serves as a reminder that even the most ambitious government initiatives must navigate complex political, technical, and market realities.

The market’s skeptical response suggests that investors prefer concrete steps over ambitious but uncertain plans. And as we all know by now, too many big announcements will numb the sensitivity of the public they are aimed to.

Here’s a thought for the soul: We pushed it so far that crypto bros became nonreactive to news of a million Bitcoin buy. The most excitable crowd in the world. Unimpressed.

Maybe, just maybe, we’re pushing too hard on the “big announcement” propaganda button.