How Bitcoin Can Specifically Surpass $500,000 if the U.S. Starts Buying

By Tristan, Contributor

​If the U.S. government decides to buy Bitcoin for a strategic reserve, projections suggest an acquisition of up to 1 million Bitcoin over five years, as mentioned in the proposed BITCOIN Act by Senator Cynthia Lummis. This would mean purchasing 200,000 BTC annually, significantly reducing available supply and inherently increasing the price.

A single announcement or confirmation of the U.S. starting to buy Bitcoin could lead to an immediate price surge. Analysts like Matt Hougan from Bitwise Asset Management have speculated that if this happens, Bitcoin could see a "rip up" in price, potentially jumping to $300,000 to $500,000 due to the sheer scale of government buying power.

Bitcoin's total supply is capped at 21 million, with over 19 million already mined. A government buying even a fraction of this would tighten supply dramatically. With current market cap considerations, even a small percentage of government holdings could push prices to unprecedented levels.

If the U.S. initiates a strategic Bitcoin reserve, other countries might follow, creating a global bidding war for Bitcoin. Posts on X suggest this could lead to a "BTC arms race," where countries buy Bitcoin to bolster their reserves, potentially sending the price into the stratosphere.

The legitimization through government buying would likely boost Bitcoin ETF investments. If the U.S. government is seen as a major holder, institutional investors would feel safer allocating more capital, which could amplify demand. Current discussions highlight increased ETF inflows as a significant demand driver.

The anticipation of government involvement could lead to speculative buying. The psychological impact of government backing would shift market sentiment, leading to a bullish market where investors front-run government purchases.

The U.S. might adjust monetary policies, possibly decreasing the surplus funds of the Federal Reserve to fund Bitcoin purchases, which would be a clear signal of Bitcoin's role in future financial strategies, potentially devaluing fiat in comparison.

With the next Bitcoin halving reducing miner rewards, the supply issuance would drop significantly. Combined with government buying, this could make the $500,000 mark not just possible but probable within a few years post-halving.

Bitcoin trades at approximately $102,000, so a jump to $500,000 would require a 390% increase from current levels.

​The BITCOIN Act mandates holding for at least 20 years, suggesting long-term commitment which would continuously support price growth.

This scenario would not only demonstrate Bitcoin's acceptance as a significant asset but could fundamentally alter its valuation due to the mechanics of supply, demand, and global perception.