Is Bitcoin a Tier 1 Asset?
- Donald V. Watkins
- 12 minutes ago
- 4 min read
By: Donald V. Watkins
Copyrighted and Published on December 17, 2025
An Editorial Opinion
In light of recent media hype about Bitcoin, I raise this simple banking question: Is Bitcoin a Tier 1 asset? The clear answer is,"No."
Bitcoin is a "junk asset" (i.e., something that is speculative, volatile, and lacking in intrinsic value) that President Donald Trump and cryptocurrency industry insiders are trying to mainstream as a legitimate alternative currency to cold, hard, cash. Of course, Trump and his family members are in the cryptocurrency business.
As a prudent international businessman and former banker, I always look for independent validation of the self-promotional claims of pitchmen who market their own "nobody has ever seen anything like it" financial products.
Tier 1 Assets
A Tier 1 asset, usually called Tier 1 Capital, refers to a bank's core, most stable financial resources like common stock, retained earnings, disclosed reserves, and gold, all of which are crucial for absorbing losses and maintaining stability.
Bitcoin is NOT a Tier 1 asset. Bitcoin is the highest tier version of nothing. In fact, it’s the best nothing in the marketplace today. Nobody knows what it really is beyond an exotic digital algorithm. Bitcoin is not backed by anything of value.
Bitcoin is a huge high-risk gamble for financial institutions in the U.S, which are already loosely regulated with inadequate government oversight.
There is not an accredited, government-regulated, financial lender in America that would accept Bitcoin as the sole collateral for a substantial personal loan. Recently, major banks like JPMorgan Chase have started to accept Bitcoin (and Ethereum) as collateral for institutional loans, using third-party custodians to secure the digital assets. Cross-collateral loan provisions tend to derisk crypto-based institutional loans.
Trump wants to use the U.S. government and pension funds to provide exit liquidity so that ordinary retail banks can engage in Bitcoin-related transactions. In effect, U.S. taxpayers and pensioners will provide the cash safety nets needed to mainstream cryptocurrencies in retail banking transactions
What is more troubling is this fact: Over 90% of all computers fast enough to process Bitcoin are manufactured in China. Once again, America would be captive to China's vast digital, AI, and IT infrastructure.
At the end of the day, crytocurrency is a huge, complex, Ponzi-like scheme and money laundering apparatus, and nothing more.
Warren Buffett, the outgoing CEO of Berkshire Hathaway and an investment guru, calls cryptocurrency “rat poison.”
The Trump Administration’s Desperate Effort to Mainstream Bitcoin
Approximately $9.2 trillion of marketable U.S. debt matured in 2025, with a similar amount expected in 2026. The financial markets are struggling to absorb this high volume of government debt without pushing interest rates higher. Higher rates increase the government's interest payments, a cycle that worries sophisticated investors.
Donald Trump plans to repay as much of this $9 trillion debt as he can with a "junk asset" like Bitcoin, rather than cash. Using unchecked presidential powers, Trump can artificially manipulate the value of Bitcoin on a daily basis. He cannot do this with cash. What is more, the U.S. dollar is worth less every year because of inflation and Trump's rudderless trade wars.
Earlier this month, the Federal Reserve Board tacitly admitted that the bond markets has not been buying much of the $9 trillion of federal debt that has matured in 2025. As such, the Federal Reserve will buy a $40 billion per month portion of it. This is part of a "reserve management" effort to ensure sufficient liquidity in the overnight lending
The last time the Federal Reserve did anything like this was in the 1940s and it led to 20% inflation. When Germany did it in the 1930s it led to hyperinflation.
Where Do American Investors Go from Here?
Donald Trump’s political answer to this financial mess is two prong: (a) seize control of the Federal Reserve Bank to manipulate monetary policy in a way that obscures America's growing national debt problem and (b) mainstream “rat poison” as an acceptable alternative to U.S. dollars.
The last grand Wall Street "funny money" scheme cost American shareholders $13 trillion in lost economic value and caused global markets to crash in 2008. Cryptocurrencies are far more more volatile and lethal than the exotic derivatives used for mortgage-backed securities and junk bonds that triggered the Great Recession of 2008.
Meanwhile, Warren Buffett announced at his May 2025 Berkshire Hathaway shareholders meeting that: "Government tendency is to debase currency over time - there's no system that beats that" and "U.S. fiscal policy scares me." As such, Berkshire has moved $348 billion in cash in recent years into Japanese yen bond positions. That's Buffett’s hedge against the dollar’s decline. He did not see investing in “rat poison” as a viable option for Berkshire.
I am following Warren Buffett’s lead. He does NOT have a track-record of bankrupting and tanking businesses. Donald Trump has bankrupted six businesses and tanked another 21 of them.