On March 2, former US President Donald Trump made headlines with the announcement of a US crypto reserve, describing it as a necessary step to “elevate this critical industry after years of corrupt attacks by the Biden administration.”
Trump clarified that the reserve would likely include major cryptocurrencies such as Bitcoin and Ethereum, alongside tokens like XRP, SOL, and ADA. This declaration had an immediate impact, causing significant surges in the prices of these altcoins within hours.
The crypto industry, consisting of executives and analysts alike, responded to the announcement with varied perspectives, particularly regarding the inclusion of altcoins in the proposed reserve.
Why The Shitcoins?
Brian Armstrong, the CEO of Coinbase, expressed enthusiasm about learning more details about the reserve, while also weighing in on the asset allocation strategy. He suggested that keeping things simple and focusing solely on Bitcoin might be the best strategy, viewing it as the clearest successor to gold.
“Just Bitcoin would probably be the best option – simplest and clear story as successor to gold. If folks wanted more variety, you could do a market cap-weighted index of crypto assets to keep it unbiased. But probably option #1 is easiest.”
Raoul Pal, founder and CEO of Real Vision, echoed similar sentiments, suggesting that the reserve might utilize an index of US-based cryptocurrencies by market cap, supplemented by BTC and ETH to remain neutral and allow the market to dictate values.
However, not all responses were in favor of incorporating altcoins. Samson Mow, a Bitcoin maximalist, voiced his discontent, remarking that the mention of altcoins at a national level was a setback for America.
“Bitcoin might be up, but it’s a sad day for America if they actually shitcoin at a nation-state level. I can’t really say I’m surprised though, with Trump having launched a meme coin.”
Arthur Hayes, founder of BitMEX, took a more skeptical stance, claiming that the announcement lacked substance and was just empty rhetoric until there was congressional approval for funding the reserve.
Concerns also emerged regarding the potential risks of including altcoins. Analyst “DonAlt” cautioned that the approval of this reserve by Trump could be fraught with challenges, while highlighting the speculative nature of altcoins in this context.
“I think the risk that Trump f**ks this up and it gets shot down is quite present. But him including shitcoins in his proposed strategic reserve opens up the possibility for the alts he mentioned to at least 3-4x.”
Bitcoin Dominance Dumps
The rapid price increases of the mentioned altcoins have contributed to a decline in Bitcoin’s market dominance, which fell below 60% following the announcement. This marks a drop from a recent 4-year high of over 64% earlier in March, illustrating the shifting dynamics within the cryptocurrency space.
Ultimately, Trump’s proposed crypto reserve hinges on Congressional voting, indicating that while the announcement has stirred the market, the path to actual implementation remains uncertain.
The unfolding situation underscores the complexities and volatility inherent in the cryptocurrency market, especially as political narratives become intertwined with digital assets.
