UniSuper's David Colosimo Flags Trump's Intervention as Disruptive to Global Shares

UniSuper's head of fixed interest, David Colosimo, warns that President Trump's actions are disrupting global shares. Trump's intervention is having tangible effects on share prices, with Intel rallying 23% and Apple up 12% after Trump granted exemptions to these companies. Colosimo believes Trump's moves reflect a departure from longstanding US economic principles and could have long-term impacts on the economy.

The recent proposal by Republican Senator Cynthia Lummis to sell a portion of the Federal Reserve's gold reserves to purchase 1 million bitcoins has sparked significant interest and debate in the financial community. Lummis' plan, introduced as the "BITCOIN Act," aims to establish a bitcoin strategic reserve without increasing the government deficit. This move, if implemented, could have far-reaching implications for global markets and economic stability.

The proposal suggests that the U.S. government could use its existing gold reserves, valued at approximately $11 billion, to acquire 1 million bitcoins. This would amount to nearly 5% of the total circulating bitcoins. Based on current market prices, the purchase would cost around $90 billion. However, if the bill is passed and investors buy before the government, the cost could increase significantly.

Lummis' bill, which requires the U.S. to hold these bitcoins for at least 20 years, is designed to leverage the assumed appreciation of cryptocurrencies to reduce the national debt. This strategy reflects Trump's broader ambition to establish a government bitcoin reserve, which was first announced at the 'Bitcoin 2024' conference in Nashville.

While some market observers, like Jennifer J. Schulp from the Cato Institute, have expressed caution about the stability and long-term viability of bitcoin as an asset, others, such as Michael Novogratz of Galaxy Digital, predict that such a move could drive the price of the largest digital token to $0.5 million. This could have a significant impact on the global cryptocurrency market and potentially encourage other countries to establish similar reserves.

The proposal also comes at a time when President Trump's actions are disrupting global shares. Trump's exemptions to companies like Intel and Apple have led to significant rallies in their share prices. David Colosimo, head of fixed interest at UniSuper, warns that these moves reflect a departure from longstanding US economic principles and could have long-term impacts on the economy.

The likelihood of Trump establishing a bitcoin reserve is currently estimated at 31% by the Polymarket prediction platform. However, the bill currently lacks bipartisan support and faces an uphill battle in Congress. Despite this, Lummis remains optimistic about gaining support in the next Congress, citing the endorsement of the idea by Trump and the growing number of crypto-friendly legislators in the Republican Senate.

As the new Congress convenes, the fate of Lummis' bill will be a key factor in shaping the future of cryptocurrency regulation and its impact on global financial markets.

References:
[1] https://www.moomoo.com/news/post/76831086/record-tr4cking-news-this-twice-in-a-lifetime-opportunity-means-the-s-p