The cryptocurrency market reacted negatively after President Donald Trump signed an executive order establishing a Strategic Bitcoin Reserve and a Digital Asset Stockpile.
While the move fulfilled a campaign promise, Bitcoin’s price dropped as investors found the details underwhelming.
Following the announcement, Bitcoin fell as much as 5.7% before recovering slightly to $88,567 as of 7:10 a.m. in London. Other major digital assets, including Ether, XRP, Cardano, and Solana, also saw declines.
One key factor behind the price drop was the government’s decision not to purchase new Bitcoin with taxpayer funds. Instead, the reserve will be capitalized using Bitcoin already owned by the US government—mainly from forfeited assets in criminal and civil cases. Future acquisitions will require budget-neutral strategies, meaning they must not impose additional costs on taxpayers.
“The expectation was that the government would actively buy Bitcoin, and now that isn’t happening,” said Stefan von Haenisch, director of trading at Bitgo Inc. “Investors who bet on government purchases are unwinding their positions.”
The order, initially shared by White House crypto czar David Sacks, outlined the following:
- The Strategic Bitcoin Reserve will be backed by Bitcoin already in US government possession (about 200,000 BTC, worth roughly $16.4 billion).
- The government will not sell Bitcoin from the reserve, aiming to hold it as a strategic asset.
- A separate Digital Asset Stockpile will include other cryptocurrencies, but the government will not acquire additional assets beyond those obtained through forfeitures.
- Unlike Bitcoin, the non-Bitcoin stockpile could be sold, with the Treasury given authority to manage it accordingly.
Trump’s announcement came ahead of a Washington DC meeting with executives from companies like Coinbase and Robinhood, signaling his administration’s engagement with the crypto industry.
While some industry figures welcomed the recognition of Bitcoin as a reserve asset, others found the plan disappointing.
“The order is largely symbolic,” said Andrew O’Neill, managing director of digital assets at S&P Global Ratings. “It signals Bitcoin’s importance but does not introduce any new demand from the US government.”
Trump had previously fueled optimism in the crypto market by pledging to make the US the “crypto capital of the planet.” His election in November helped drive Bitcoin to a record high of $109,071 in January, but sentiment has since weakened due to concerns over tariffs, security breaches, and ETF outflows.
With input from Bloomberg and Al Jazeera.
