Cryptocurrency prices fell on Friday after President Trump’s executive order to create a US strategic bitcoin reserve disappointed investors. The plan will only hold assets forfeited to law enforcement, not promote large-scale government purchases of digital assets as traders had hoped. Bitcoin dropped about 6.6 percent but slightly rebounded to around $89,000. Ethereum and other cryptocurrencies also saw declines. Supporters of the reserve argue it could serve as an alternative to the dollar. The administration mentioned acquiring more bitcoin only if it doesn’t impose extra costs on taxpayers. Overall, this move is seen as mainly symbolic, highlighting the government’s growing acknowledgment of the cryptocurrency sector. Stay updated by signing up for free cryptocurrency news delivered to your inbox.
Cryptocurrency Weekly Update: Disappointment from Trump’s Bitcoin Reserve Announcement
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Cryptocurrency prices took a hit on Friday following President Donald Trump’s announcement about establishing a US strategic bitcoin reserve. Investors were left disappointed when they realized that the reserve would only hold assets forfeited to law enforcement, rather than sparking large-scale government purchases of digital currencies. Bitcoin saw a decline of up to 6.6 percent, trading around $89,000 after the announcement.
Traders had initially hoped for a more aggressive approach from the government, especially after Trump hinted at a broader reserve that could include not just bitcoin but also other cryptocurrencies like ethereum, cardano, solana, and XRP. The announcement had briefly boosted their prices earlier in the week.
The concept of a reserve asset is not new; countries often maintain gold or oil reserves to protect themselves in times of crisis. In this case, the White House mentioned plans to create a national digital assets stockpile, although they did not provide details on which tokens would be included. Notably, they stated no additional purchases would be made beyond assets acquired through investigations.
Ethereum, the second-largest cryptocurrency, fell 4.5 percent to $2,194, while cardano dropped 7.8 percent to $0.87. Solana and XRP also faced declines of 5.6 percent and 3.4 percent, respectively.
Supporters of a bitcoin reserve argue that it could serve as a viable alternative to the dollar, positioning bitcoin as “digital gold” and a hedge against government policies. The Trump administration did indicate a willingness to explore purchasing more bitcoin, as long as it wouldn’t burden taxpayers.
In a social media post, David Sacks, a key figure in the White House’s digital asset strategy, described the reserve as a “digital Fort Knox.” He estimated the US currently holds around 200,000 bitcoins, valued at approximately $17.8 billion, promising transparency regarding government digital asset holdings.
However, experts note that the decision to create a bitcoin reserve is largely symbolic at this stage, with no clear indication of how much bitcoin might be acquired or when. The White House is also hosting a summit with investors and major industry leaders, signaling a significant moment for the acceptance of cryptocurrency by the government.
Stay tuned for more updates on this evolving situation in the cryptocurrency Market, and make sure to sign up for our newsletter for the latest news and trends delivered straight to your inbox.
What caused crypto prices to fall recently?
Crypto prices dropped mainly because traders were disappointed with the US strategic reserve plan. They expected some positive news, but the outcome did not meet their hopes.
How does the US strategic reserve plan affect crypto?
The US strategic reserve plan can influence investor confidence. When the plan doesn’t live up to expectations, traders may panic and sell, leading to a drop in crypto prices.
Is this drop in crypto prices expected to last?
It’s hard to say. The Market is always changing, and a temporary drop can happen before prices recover. Traders are keeping an eye on upcoming news and trends that could change the situation.
What should I do if I have crypto investments?
If you have crypto investments, it’s essential to stay informed. Consider your long-term goals and be patient. Selling in a panic might not be the best choice, especially if you believe in the future of crypto.
Are there any signs of recovery for crypto prices?
Sign of recovery can come from positive news or changes in investor sentiment. Keep watching the Market trends, as a shift in investor confidence can help prices bounce back in a short time.