The cryptocurrency market remains on a downward trend as investors reevaluate the effects of ongoing trade disputes on the global economy, along with President Donald Trump’s recent Bitcoin Reserve initiative.
Bitcoin has fallen by 4.8%, trading at $81,729, while Ethereum is down by 8%, teetering just above its November 2023 levels at around $2,000. Among the top 10 cryptocurrencies, Dogecoin suffers the most, plummeting approximately 13% to $0.16.
This decline comes despite Trump’s signing of an Executive Order on Thursday that formally creates the Strategic Bitcoin Reserve and permits the establishment of a digital asset stockpile.
“The immediate dip appears to be a reaction to the lack of a defined budget for Bitcoin acquisitions in the near future,” observed QCP Capital, a digital asset trading firm based in Singapore, in a recent note.
In fact, the executive order instructs the Secretaries of Treasury and Commerce to devise “budget-neutral strategies” for acquiring more Bitcoin, yet it does not endorse the use of taxpayer funds for immediate purchases.
This seems to have displeased investors, according to David Lawant, the research lead at FalconX.
“Bitcoin dropped roughly 5% right after the announcement but managed to recover much of the loss, indicating that market sentiment is skeptical regarding the U.S. government’s imminent commitment to acquiring crypto assets in public markets,” he stated on Friday.
Nonetheless, some analysts in the industry consider this initiative a significant step toward institutional acceptance of Bitcoin.
The executive order introduces a Bitcoin Strategic Reserve that is distinct from the Digital Asset Stockpile, which will encompass a range of altcoins, including Ethereum.
The reserve is anticipated to be funded by Bitcoin acquired through criminal and civil asset forfeitures, although the exact amount to be allocated is still uncertain.
According to Arkham Intelligence, U.S. government wallets currently hold around 198,000 BTC (valued at approximately $16.1 billion based on current prices).
However, it is important to note that some of these holdings may originate from exchange hacking incidents and might not be available for the reserve if returned to their original owners.
The executive order also outlines a 60-day review by the Treasury to look into legal and investment options regarding the reserve, stressing that Treasury and Commerce must find ways to acquire additional Bitcoin without impacting the federal budget or burdening taxpayers.
Possible methods include reallocating some U.S. gold reserves or utilizing the Exchange Stabilization Fund.
“The general response from the industry towards the order has been almost entirely positive,” Lawant noted, emphasizing that this move sets a significant precedent for Bitcoin at the sovereign level.
A crucial question moving forward is whether Congress will embark on formalizing a long-term strategy for Bitcoin acquisitions.
While an executive order can set new policies, legislative action could ensure that Bitcoin holdings become a permanent aspect of U.S. financial reserves.
The upcoming Bitcoin for America event on March 11, hosted by Senator Cynthia Lummis alongside the Bitcoin Policy Institute, is anticipated to drive further discussions on legislative engagement.
In the meantime, traders seem to be seeking clearer regulatory guidelines while also considering the broader consequences of Trump’s trade tariffs, which have caused upheaval in global markets and have placed additional pressure on risk-sensitive assets, including cryptocurrencies.
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