Trump’s Bitcoin Reserve Plan Fails to Excite the Crypto Market
President Donald Trump signed an executive order on Thursday establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, fulfilling a campaign promise but sparking mixed reactions in the volatile cryptocurrency markets.
Made by White House AI and Crypto Czar David Sacks, the announcement revealed that criminal and civil asset forfeiture processes will capitalize Bitcoin already owned by the federal government, so essentially generating what Sacks described as “a digital Fort Knox for cryptocurrency.”
“The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeished as part of criminal or civil asset forfeiture proceedings,” Sacks said on social media. “It will serve as a store of value.”
Markets See Volatility After Trump Signs Executive Order on Crypto Reserve
After the announcement, markets for cryptocurrencies showed notable volatility. After the ruling was signed, Bitcoin BTC/USD lost around 5% to $85,000; other main cryptocurrencies including Ethereum ETH/USD, XRP XRP/USD, Cardano ADA/USD, and Solana SOL/USD fell between 4-8%.
Market watchers believe the negative reaction results from disappointment over the reserve’s composition—that it will only feature tokens already owned by the government instead of integrating fresh purchases. Arguing that without a purchase plan, the approach is a “pig in lipstick,” Charles Edwards, creator of Bitcoin-oriented hedge fund Capriole Investments, said it is the “most underwhelming and disappointing outcome we could have expected for this week.”
Some business analysts, meanwhile, see long-term promise in the relocation. Establishing a bitcoin reserve lowers the possibility the government will ever try to ban the currency and “dramatically increases the likelihood that other nations will establish strategic bitcoin reserves,” Chief Investment Officer for Bitwise currency Management Matt Hougan said.
Details of the Executive Order
The executive order lays two separate holdings:
- Strategic Bitcoin Reserve: Designed especially for Bitcoin confiscated in forfeitures, it will function as long-term value storage.
- Digital Assets Stockpile for United States: For other digital assets acquired from forfeitures
The order also orders the Secretaries of Treasury and Commerce to create “budget-neutral strategies for acquiring additional bitcoin,” given these approaches don’t incur more expenses for American taxpayers.
Later on, Trump said on his Truth Social platform that the crypto reserve will comprise XRP, Solana, and Cardano, then adding that Ethereum and Bitcoin would be “the heart” of the reserve. Data from Arkham Intelligence, however, indicates that among the seized assets the U.S. government does not now have any XRP, SOL, or ADA.
Broader Economic Context
The executive order falls within increasing economic uncertainties. Recently alerting about stress in the U.S. consumer sector, especially among lower-income individuals, Philadelphia Federal Reserve President Patrick Harker suggested support for larger interest rate decreases.
In 11 weeks, the S&P 500 volatility index (VIX) has hit its highest points, suggesting growing investor risk aversion. Historically, at least in the short run, Bitcoin has struggled under times of great market volatility.
Usually moving in the “direction of global liquidity 83% of the time in any given 12-month period, which is higher than any other major asset class,” macroeconomics specialist Lyn Alden has observed of Bitcoin. This implies that, should central banks extend monetary policy to boost their own economies—as China and the European Central Bank have hinted— Bitcoins might gain over time.
Government Holdings and Transparency
Arkham Intelligence estimates that the U.S. government owns about $18.28 billion worth of seized cryptocurrency, mostly consisting of 198,109 BTC valued $17.87 billion. Third greatest government ownership is ETH valued over $119 million, behind Tether valued at $122 million.
While Trump’s directive “directs a full accounting of the federal government’s digital asset holdings,” Sacks claimed there had never been a complete audit of the government’s crypto holdings.
Investors are closely monitoring whether other nations follow suit in creating Bitcoin reserves as the market absorbs these changes, therefore supporting a continuous bull run towards $95,000 and beyond. Still, given more general political and economic uncertainty, the crypto market is wary for now.
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