US President Donald Trump signed an executive order on Thursday to establish a Strategic Bitcoin Reserve, a move that fulfills one of his key campaign promises. Announced by White House Crypto and AI czar David Sacks in a post on X, the reserve aims to position the United States as a global leader in cryptocurrency, aligning with Trump’s goal to “make America the crypto capital of the world.”
Markets React to Strategic Bitcoin Reserve Announcement
Despite the initial anticipation, the announcement failed to provide a significant boost to Bitcoin’s price. Bitcoin’s value dropped from over $90,000 (€83,290) to around $84,600 (€78,300) before recovering to approximately $87,000 (€80,520) by 5 am CET.
The decision has left some crypto enthusiasts disappointed. Sacks clarified that the Bitcoin Reserve will be funded solely through assets obtained from criminal and civil forfeiture cases, with no taxpayer money involved in purchasing cryptocurrencies. “The government will not acquire additional assets for the Stockpile beyond those obtained through forfeiture proceedings,” Sacks wrote.
Furthermore, the government’s 200,000 Bitcoin holdings, previously acquired through forfeiture, will remain untouched and serve as a store of value. The announcement emphasized that selling these assets prematurely has already resulted in over $17 billion in losses to taxpayers, underscoring the government’s intention to maximize the value of its holdings.
The order also creates a US Digital Asset Stockpile, which will include digital assets other than Bitcoin obtained through forfeiture.
Bitcoin’s Relationship with Risk Assets
The announcement initially caused a brief rally in Bitcoin and other cryptocurrencies. Bitcoin surged last Sunday after Trump posted on Truth Social, stating he would direct the Presidential Working Group to move forward with a Crypto Strategic Reserve that would include Bitcoin, Ethereum, XRP, Solana, and Cardano. The rally saw Bitcoin rise from $86,000 (€79,600) to over $94,000 (€87,000). However, the gains were short-lived, as the next day Trump confirmed a 25% tariff on imports from Canada and Mexico and an additional 10% levy on Chinese goods, leading to a sharp market downturn.
Bitcoin has been in a downtrend since reaching an all-time high of over $109,000 (€100,880) on January 20, the day of Trump’s inauguration. By February 28, Bitcoin had fallen below $80,000 (€74,000), marking its lowest point since November 2024 and its worst month in three years.
The decline in Bitcoin’s price reflects broader market concerns. The cryptocurrency’s performance has been closely tied to traditional risk assets, particularly US tech stocks. Bitcoin is down 6% this year, mirroring a 6.4% drop in the Nasdaq index, which is heavily weighted by tech stocks.
Crypto and Macroeconomic Factors
Bitcoin’s price fluctuations this year demonstrate its growing sensitivity to macroeconomic trends, such as trade tensions and interest rate changes. With large Wall Street firms now heavily invested in cryptocurrencies, Bitcoin is increasingly affected by liquidity flows, contributing to its volatility.
Uldis Teraudklans, Chief Revenue Officer at Paybis, noted in a recent report that Bitcoin’s volatility this year has been influenced by broader economic factors, including fears of a global trade war. As cryptocurrency markets continue to evolve, the US government’s new Bitcoin reserve strategy signals a shift towards institutional involvement in the digital asset space.
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