On Thursday, U.S. President Donald Trump signed an executive order aimed at establishing a strategic reserve of Bitcoin (BTC) that will include assets seized through various law enforcement actions. This move has generated significant discussion within the cryptocurrency community and beyond.
According to David Sacks, the White House crypto and AI czar, the reserve will encompass not only Bitcoin but also other cryptocurrencies forfeited in criminal and civil proceedings. Notably, he emphasized that no taxpayer funds will be utilized for the acquisition of these digital assets.
Currently, the U.S. government holds an impressive 198,000 bitcoins valued at approximately $17.3 billion. By designating this stockpile as a reserve, the government effectively mitigates over $17 billion in potential selling pressure from the market.
Despite this development, Bitcoin has continued to experience volatility, with prices dipping to lows near $84,700. This decline reflects investor apprehensions stemming from the absence of new purchases of BTC by the U.S. government. However, optimism has revived prices to around $87,600 as speculation mounts regarding a favorable crypto tax policy announcement at the upcoming White House crypto summit scheduled for Friday.
Market experts have weighed in on the implications of this executive order. Valentin Fournier, an analyst at BRN, expressed that many investors were left disappointed, as the executive order clearly states the government will not be acquiring additional assets apart from those obtained through forfeiture. This limited scope has contributed to a decline of approximately 4% in major cryptocurrencies, including Bitcoin, Ethereum, and Solana.
On a more optimistic note, Commerce Secretary Howard Lutnick has been tasked with creating a budget-neutral strategy for acquiring more Bitcoin. Given Lutnick’s strong connections to the Bitcoin ecosystem through MicroStrategy, some analysts believe this could hint at a concealed accumulation strategy by the U.S. government, potentially setting the stage for a significant market rally.
Dick Lo, CEO of TDX Strategies, acknowledged initial market disappointment stemming from high expectations leading up to the announcement. Nonetheless, he describes the situation as an overall positive development, noting it is unrealistic to anticipate new government buying without a clear funding strategy in place. Lo highlighted the critical distinction made in the order between Bitcoin and other cryptocurrencies, as no funds will be allocated towards acquiring altcoins.
Furthermore, there is anticipation of positive developments from the impending Crypto Summit, particularly concerning more favorable tax treatments for cryptocurrencies, which has the potential to bolster wider sentiment in the space.
Andrew O’Neill, Managing Director at S&P Global Ratings, emphasized the symbolic importance of the executive order, marking Bitcoin’s first formal recognition as a reserve asset of the United States government. For now, the reserve will only include Bitcoin currently held by the government due to forfeiture, committing to hold these bitcoins without selling them immediately.
O’Neill also pointed out that while the order allows for the possibility of acquiring additional Bitcoin under budget-neutral circumstances, details regarding the amount or timeline remain uncertain. Furthermore, the executive order distinctly separates Bitcoin from other digital assets, which will not be part of this reserve but will be categorized within a separate stockpile.
Lastly, Jeff Anderson, head of Asia at STS Digital, noted in a Telegram message that the market is undergoing a repricing of risk now that active government purchases of BTC are off the table, resulting in a decrease in the 30-day implied volatility index.
This blog will continue to monitor market expert insights as developments unfold in the wake of this executive order and the upcoming crypto summit.
