US Bitcoin Bill Sparks Hope for Long-Term Uptick in Demand

The proposed American Reserve Modernization Act (ARMA Act) has caught the attention of investors as it aims to establish a permanent legal framework for the US strategic Bitcoin reserve. This would ensure that future administrations cannot reverse the policy and sell government-held Bitcoin, reducing the risk associated with executive orders.

According to Thanalop Preedamanoch, head of investment and fund manager at Merkle Capital, major Bitcoin rallies have historically been driven by new sources of demand. He believes that governments could become a significant source of demand in the future, setting the direction for other countries.

The ARMA Act would establish a strategic Bitcoin reserve in law, preventing the sale or transfer of government-held Bitcoin for at least 20 years and requiring regular disclosure, including quarterly proof-of-reserve audits. The bill also requires the Treasury and Commerce departments to study ways to increase Bitcoin holdings without raising taxes, issuing new debt, or adding to the federal deficit.

The potential impact of the ARMA Act on near-term demand could be limited as it does not require the government to immediately buy additional Bitcoin. However, a legally protected US reserve could strengthen the argument for Bitcoin as a strategic asset and potentially encourage other governments to consider similar policies.