US President Donald Trump has hinted at progress being made on the US’ efforts to develop a strategic cryptocurrency reserve.
During his election campaign, Trump unveiled his plan for the US to become the “crypto capital of the planet” by maintaining a “strategic national bitcoin stockpile” on home soil, with the then presidential hopeful stating that he will “never sell” the nation’s more than 200,000 bitcoin amassed from seizing assets through law enforcement action.
Taking to his social media platform Truth Social over the week, he confirmed that talks are underway towards turning his plans into reality.
“A US crypto reserve will elevate this critical industry after years of corrupt attacks by the Biden administration, which is why my executive order on digital assets directed the Presidential Working Group to move forward on a crypto strategic reserve that includes XRP, SOL, and ADA,” Trump wrote.
“I will make sure the US is the crypto capital of the world. We are Making America Great Again!”
With his original post notably omitting two of the world’s largest cryptocurrencies, the President added later: “And obviously, BTC and ETH, as other valuable cryptocurrencies, will be the heart of the reserve. I also love bitcoin and Ethereum!”
Off the back of the news, bitcoin, which had been hovering in the US$80,000s for some days, surged to US$94,700. Meanwhile, Ethereum jumped 15 per cent to peak at US$2,520.
But the rally was short-lived, with both witnessing a reversal overnight. By Tuesday afternoon (AEDT), bitcoin was trading at some US$83,000 and Ethereum at US$2,072.
Mena Theodorou, co-founder at Coinstash, explained that investor optimism quickly faded as markets began to assess the “bigger picture”.
“Although last week’s announcement initially fuelled excitement, broader economic concerns and political realities have tempered the rally, leading to a sharp reversal in bitcoin and other major cryptocurrencies,” Theodorou told InvestorDaily.
Namely, he said investors are now recognising that establishing a US strategic cryptocurrency reserve is not simply an overnight job and will require congressional approval alongside other administrative hurdles.
“The weekend rally was largely driven by speculation, but uncertainty remains over whether the plan would even involve direct cryptocurrency purchases. As the initial hype wore off, bitcoin’s 10 per cent surge began to look overextended – especially given the backdrop of global economic instability.”
According to the co-founder, markets were also shaken by the news that Trump intends to move forward with earlier announced 25 per cent trade tariffs on both Canada and Mexico – which are set to take effect in mere hours. Moreover, Trump has added another 10 per cent tariff on China, taking the cumulative increase during his current term to 20 per cent.
“With China vowing to retaliate, trade tensions are escalating, adding to investor uncertainty. As a result, a broad sell-off has hit both traditional and crypto markets. Bitcoin has erased essentially all of Sunday’s gains, with major altcoins suffering even steeper losses,” Theodorou said.
Similarly, eToro’s market analyst, Josh Gilbert, said events that transpired over the weekend speak to how quickly cryptocurrency markets can turn.
“We always knew that Trump’s presidency would be pivotal for crypto throughout his term,” Gilbert said.
“However, the concerns from last week remain unchanged from a macro perspective.
“Given the President’s vested interests, it feels like this is something investors may need to get used to, sell-offs of this nature could continue to be supported moving forward.”
