The cryptocurrency market took a hit Thursday night after President Donald Trump signed an executive order establishing a strategic bitcoin reserve for the United States, along with a separate digital asset stockpile. While this announcement had been highly anticipated, investors were left underwhelmed by the details of the plan, leading to a sell-off in the crypto market.
Bitcoin Reserve Drops as Market Reacts to Policy Uncertainty
Following the news, bitcoin’s price dropped by 3% to $87,586.86, according to Coin Metrics. It briefly dipped as low as $84,688.13 before recovering slightly. The initial reaction was a wave of selling, as traders realized the U.S. government had no immediate plans to buy more bitcoin beyond what it had already seized through past law enforcement actions.
Other cryptocurrencies also experienced losses. Ether (ETH) fell 2% to $2,184.08, while XRP and Solana’s SOL dropped 1% and 3%, respectively. Cardano’s ADA took a heavier hit, plunging 13%.
Why Did the Market React Negatively?
Many investors had expected Trump’s executive order to include a government purchase plan, injecting fresh demand into the market. Instead, the order simply formalized the government’s control over bitcoin that had already been confiscated in criminal cases. This was a disappointment for traders who had been hoping for a more aggressive pro-crypto stance.
David Sacks, the White House’s crypto and AI czar, clarified in a post on X (formerly Twitter) that the government’s bitcoin reserve would only include bitcoin already owned by the U.S., meaning it wouldn’t cost taxpayers anything. Currently, the U.S. government holds more than 198,000 bitcoins worth about $17 billion, according to blockchain analytics firm Arkham.
The executive order also introduced a digital asset stockpile, which will hold cryptocurrencies other than bitcoin, but only those seized through legal proceedings. Arkham data suggests that the government owns approximately 56 ether tokens worth $119 million, but it does not list holdings of XRP, Solana, or Cardano.
Investors Were Hoping for More Immediate Buy Pressure
Market analysts quickly weighed in on the policy, with many agreeing that while the announcement wasn’t bad news, it fell short of expectations.
“It’s good news in the long term, but not what traders wanted to hear right now,” said Steven Lubka, head of private clients and family offices at Swan Bitcoin. “People were hoping for near-term buy pressure.”
Sacks did note that the Secretaries of Treasury and Commerce have been given the authority to develop “budget-neutral strategies” for acquiring additional bitcoin in the future. However, this means any further accumulation would have to be funded without extra costs to taxpayers, leaving investors uncertain about whether significant government purchases will happen anytime soon.
The Announcement Comes Amid Broader Market Weakness
Trump’s announcement came just ahead of the first White House Crypto Summit, an event that had sparked speculation about major policy shifts in the crypto industry. However, broader market conditions have weighed on sentiment, making it difficult for bitcoin and other cryptocurrencies to sustain momentum.
Economic concerns such as the ongoing trade war and rising inflation have created uncertainty across global markets. These macroeconomic factors have overshadowed some of the excitement surrounding the U.S. Bitcoin Reserve, leading to increased volatility.
On Wednesday, JPMorgan analysts cautioned that they don’t see a big rally in crypto happening soon, citing weaker demand and economic headwinds. Bitcoin briefly touched the critical $90,000 level earlier this week, but until it can hold above that threshold consistently, analysts warn it remains at risk of a pullback to $70,000.
What’s Next for Bitcoin and the Crypto Market?
While the strategic Bitcoin Reserve could be a step toward greater government recognition of crypto assets, the lack of immediate action left investors unimpressed. The executive order’s long-term impact remains unclear, and for now, traders are shifting focus back to broader market trends.
Unless there’s a significant change in policy or an increase in government-led bitcoin acquisitions, the crypto market will likely remain heavily influenced by external factors such as inflation, interest rates, and stock market movements.
For now, investors will be watching how the government manages its existing crypto holdings—and whether Trump’s administration takes further steps to integrate bitcoin into U.S. financial strategy.
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