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On Friday, cryptocurrency prices took a hit as an executive order from President Donald Trump aimed at creating a US strategic bitcoin reserve left investors disillusioned, as the plan would not initiate a significant wave of government acquisitions of digital assets.
Bitcoin’s price fell by as much as 6.6 percent before slightly recovering to trade around $89,000 following the order signed late Thursday, which stated that the reserve would only house assets forfeited to US law enforcement.
Traders were hopeful that the US government would start purchasing bitcoin and other cryptocurrencies after Trump sparked optimism with a social media post on Sunday. His suggestion that the reserve could encompass ethereum and lesser-known cryptocurrencies like cardano, solana, and XRP led to a surge in their values.
A reserve asset is typically a vital resource utilized during crises. The US has an emergency oil reserve to shield itself against supply disruptions, similar to many nations that hold gold reserves.
The White House announced plans to establish a national stockpile of digital assets that are not bitcoin, although it did not specify which assets would be included. The government indicated that it “will not acquire additional assets” for this stockpile beyond those sourced from investigations and may consider “potential sales” from it.
Ethereum, the second-largest cryptocurrency, saw a decline of 4.5 percent to $2,194. The cardano blockchain’s token, Ada, dropped 7.8 percent to $0.87, while solana decreased 5.6 percent to $143, and XRP fell 3.4 percent to $2.52.
Proponents of a bitcoin reserve argue that the US should create a reserve that could act as an alternative to the dollar. Bitcoin has been compared to ‘digital gold,’ as it is an asset that cannot be devalued by central banks or government policies.
The Trump administration also committed to exploring the possibility of acquiring more bitcoin as long as its strategies remain “budget neutral and do not impose additional costs on American taxpayers.”
“The US will not sell any bitcoin held in the Reserve. It will be maintained as a store of value. The Reserve is akin to a digital Fort Knox for the cryptocurrency often referred to as ‘digital gold’,” stated David Sacks, billionaire investor and the White House’s crypto advisor on the social media platform X.
Sacks estimated that the US holds around 200,000 bitcoins, valued at approximately $17.8 billion, and assured a “full accounting” of the government’s digital asset portfolio.
“There is no current indication of how much, if any, might be acquired, nor is there a timeline,” remarked Andrew O’Neill, digital assets managing director at S&P Global Ratings, noting that the initiative “is primarily symbolic.”
The acceptance of cryptocurrencies by Washington coincides with the White House hosting investors and leaders of major US companies, including Brian Armstrong of Coinbase and Michael Saylor of Strategy, at a summit on Friday, emphasizing its growing acceptance of the industry.
