The stock prices of Bitcoin and cryptocurrencies dropped significantly when President Donald Trump established the Strategic Bitcoin Reserve through executive order.
A plan to seize Bitcoin from criminal prosecutions and civil suits has been established. After White House Crypto Czar David Sacks made the statement Bitcoin experienced a rapid 5% price decline that took it to $85,000. MicroStrategy ($MSTR) faced a decline of greater than 7% due to investors unhappy with the unclear approach.
Bitcoin reserve announcement sparks market concerns
Sacks assured that taxpayer money would not be used to purchase Bitcoin. Instead, the government will hold 200,000 Bitcoins already in its possession as a long-term asset. He stated that the U.S. will not sell Bitcoin from the reserve, calling it a “digital Fort Knox.” He also noted that previous government sales had cost taxpayers billions in potential gains.
Trump’s addition of XRP, Solana (SOL), and Cardano (ADA) to the Strategic Crypto Reserve, despite his initial support for crypto, received substantial criticism. GOP leaders Tyler Winklevoss and Nic Carter view this judgment as negatively weakening Bitcoin’s stance. According to Carter, trading speculative assets might reduce trust in the strategic reserve. Some crypto supporters now interpret this action as a proactive support-seeking effort instead of strategic planning.
Stock and Crypto markets decline under Trump’s leadership
The broader market has also reacted negatively. Since Trump’s second term began, the Nasdaq Composite has fallen 8%, the S&P 500 is down 4.3%, and the Russell 2000 has dropped 9.2%, marking one of its worst performances.
Bitcoin is up 29% since the election but has declined 18% since Inauguration Day. Ethereum has fallen 37% in the same period, while Solana has lost 50%. XRP surged 380% post-election but has dropped 23% since Trump returned to office. These losses highlight growing uncertainty over the administration’s crypto policies.
Federal Reserve and treasury officials address concerns
Treasury Secretary Scott Bessent is scheduled to speak on CNBC’s “Squawk Box” to discuss how the reserve could impact financial markets. Investors seek clarification on how the government plans to acquire more Bitcoin without disrupting prices. Legal expert Johnny Deaton proposed a tax payment system to the federal government using Bitcoin currency but with an added fund allocation to the Bitcoin reserve.
During his appearance Jerome Powell will discuss Bitcoin reserve compatibility with federal economic policy objectives. The bond market demonstrates a reaction through the increased rates of 4.27% for the 10-year Treasury yield and 3.95% for the 2-year yield. Commercial experts at Goldman Sachs predict that the government’s digital currency plans will significantly change the financial sector.