Bitcoin’s value drops as Trump’s strategic reserve fails to sway markets

Cryptocurrency markets experienced a significant downturn after the announcement of US President Donald Trump’s executive order to create a Bitcoin strategic reserve and other digital assets stockpile. Despite hopes of government purchases, Bitcoin saw a sharp decline of up to 6 percent, leaving investors disappointed.
The value of Bitcoin plummeted following Trump’s order, which notably did not include any concrete plans for the government to actively buy Bitcoin. The cryptocurrency dropped to as low as $84,900 before recovering slightly to trade at around $87,700.
In a statement regarding the order, Trump’s crypto advisor, David Sacks, detailed that the “Strategic Bitcoin Reserve” and “Digital Asset Stockpile” would be funded with assets seized in criminal or civil proceedings. Sacks emphasized that this initiative would not require any taxpayer money, highlighting that the US government potentially holds about 200,000 Bitcoin, although a comprehensive audit has never been conducted. The executive order mandates a full assessment of the federal government’s digital asset holdings.
Furthermore, the order stipulated that the Secretaries of Treasury and Commerce should devise “budget-neutral strategies” to obtain more Bitcoin without any cost to US taxpayers. Trump’s decision to establish a cryptocurrency stockpile was a central part of his vision to establish the US as the “crypto capital of the planet.”
However, not everyone in the crypto community was impressed by the announcement. Tech entrepreneur Shayan Salehi criticized the government’s decision not to acquire additional assets, suggesting that it could trigger a bear market. Spencer Hakimian of Tolou Capital Management described the plan as “underwhelming,” highlighting the government’s stance on only acquiring Bitcoin in a revenue-neutral manner, which he deemed unlikely.
The US currently holds an estimated 200,000 Bitcoin collected through criminal and civil forfeitures. Sacks proposed that the reserve would act as a “digital Fort Knox,” safeguarding Bitcoin’s value by preventing premature sales that may result in significant losses for US taxpayers.
Apart from a Bitcoin reserve, Sacks revealed plans to establish a separate stockpile for “digital assets other than Bitcoin” obtained through legal proceedings, which could include various tokens like ether, XRP, Solana, and Cardano. Trump’s public declaration of his intentions to form a cryptocurrency reserve has fuelled interest in these digital assets.
Since Trump’s election, the value of Bitcoin has experienced significant fluctuations, reaching an all-time high of $109,071 in January. Despite growing support for cryptocurrency, critics have raised concerns about the lack of intrinsic value in these assets, drawing parallels to Ponzi schemes.
In conclusion, Trump’s executive order to create a Bitcoin strategic reserve and digital asset stockpile failed to meet the expectations of crypto markets, resulting in a decline in Bitcoin’s value. The decision not to actively purchase Bitcoin disappointed investors, leading to criticism within the crypto community. The US government’s efforts to establish a cryptocurrency reserve reflect Trump’s ambition to position the country as a global leader in the crypto space.