Tension in the crypto world flared again after President Donald Trump signed an executive order to create a strategic Bitcoin reserve. The announcement was met with mixed reactions, as Bitcoin prices dropped sharply, falling as much as 5.7% before stabilizing around $87,125 by noon in New York.
Despite the excitement among crypto executives on social media, the market felt the pressure. Stocks struggled to maintain gains amid economic uncertainties. The Nasdaq 100 Index slipped into correction territory, and crypto-related companies took a hit. Coinbase Global Inc. dropped 3.5%, while Michael Saylor’s Strategy fell 7.5%.
Other digital currencies highlighted by Trump, such as Ether, XRP, Cardano, and Solana, also saw declines. “While this wasn’t the outright bullish catalyst many were hoping for, it remains structurally positive for crypto,” noted QCP Capital. They emphasized that the fears of random Silk Road Bitcoin sales disrupting the market are now behind us.
The order, initially shared by White House crypto czar David Sacks on X, clarified that no taxpayer money would fund the Bitcoin reserve. Instead, it would rely on Bitcoin already owned by the federal government. Any future acquisitions would need to be budget-neutral and cost-free for American taxpayers. The government will also not sell any Bitcoin in the reserve.
Stefan von Haenisch from Bitgo Inc. pointed out that the absence of new purchases could be weighing on market sentiment. Investors had anticipated government buying, but now they are unwinding their positions. The rules for the non-Bitcoin stockpile are even stricter, as the government won’t acquire additional crypto assets except through forfeiture proceedings.
The US currently possesses about $17 billion in Bitcoin and $400 million in other tokens, primarily from asset forfeitures. This executive order comes right before a significant gathering of crypto executives in Washington, where representatives from firms like Coinbase and Robinhood will meet Trump and Sacks.
Andrew O’Neill from S&P Global Ratings highlighted the symbolic importance of the order. It marks the first time Bitcoin has been officially recognized as a reserve asset of the US government.
Trump’s pledge for a strategic Bitcoin reserve aimed to appeal to a politically influential industry. Despite the initial excitement that led to a rally in token prices, market sentiment has soured due to various factors, including tariffs and a major crypto hack. The recent announcement about including tokens like Solana and Cardano in government plans only added to the criticism from Bitcoin supporters.
