Alabama’s State Auditor, Andrew Sorrell, is pushing for the state to create a Strategic Bitcoin Reserve (SBR). He believes this is a smart move, given Bitcoin’s potential and the growing interest in crypto among policymakers.
Why Bitcoin? Diversification and Future-Proofing
Sorrell sees Bitcoin as a key part of a diversified investment strategy. He argues that:
- It’s a massive, growing market: Crypto is a $3 trillion market, and Alabama currently has zero exposure.
- It’s a hedge against inflation and currency risk: Unlike the US dollar, Bitcoin’s value isn’t tied to government policies. If the dollar weakens, Bitcoin could hold its value or even increase.
- It could improve the state’s finances: Bitcoin could be used as collateral for loans, strengthening Alabama’s financial position.
Following the Federal Lead (and Florida’s!)
Sorrell’s proposal isn’t in a vacuum. Several other states and the federal government are also exploring similar strategies:
- President-elect Trump: Plans to keep and potentially expand the government’s existing Bitcoin holdings (around 207,000 BTC).
- Wyoming: Senator Cynthia Lummis has introduced a bill requiring the US Treasury to create its own SBR.
- Florida: Is considering a similar investment as early as 2025.
- Pennsylvania: Has already introduced legislation to allocate a portion of its funds to Bitcoin.
Alabama could be next, potentially creating a “crypto arms race” between states. The recent approval of Bitcoin ETFs by the SEC makes it easier for states to invest.
A Cautious Approach: Dollar-Cost Averaging
Sorrell isn’t suggesting a massive, immediate Bitcoin purchase. He recommends a more gradual approach:
- Dollar-cost averaging: Investing a set amount of money each month over two years to reduce risk associated with Bitcoin’s price volatility. He notes that Bitcoin recently surpassed $100,000, making a large, immediate purchase potentially risky.
Long-Term Vision: A Million-Dollar Bitcoin?
Sorrell believes in Bitcoin’s long-term potential, predicting it could one day reach $1 million per coin. He emphasizes the importance of a long-term “buy and hold” strategy rather than trying to make quick profits. At the time of writing, Bitcoin was trading around $97,607.
