Bitcoin reserve disappoints market, weighs on crypto

A simmering tension in the crypto industry resurfaced after President Donald Trump signed a long-awaited order creating a strategic bitcoin reserve and an additional stockpile of other digital assets.

Even as crypto executives issued effusive social media posts praising the move, bitcoin fell as much as 5.7%. The largest digital asset later pared losses to about 1%, trading at $89,410 as of 8:10 a.m. Friday in New York.

Four other digital tokens that had previously been highlighted by Trump — ether, XRP, cardano and solana — also saw declines.

“While this wasn’t the outright bullish catalyst many were hoping for, it remains structurally positive for crypto,” said QCP Capital in a note. “The prospect of random Silk Road BTC sales disrupting the market is now behind us, and the U.S. government’s commitment to a long-term crypto strategy has been reaffirmed.”

While the creation of the bitcoin-specific reserve fulfills a promise Trump made on the campaign trail, the details fell short of industry expectations.

The order, shared initially as a post on X by White House crypto czar David Sacks, indicated that the government wouldn’t use taxpayer money to fund a strategic reserve of the largest digital asset.

Instead, the reserve would be capitalized with bitcoin already owned by the federal government. Any further acquisitions would require “budget-neutral strategies for acquiring additional bitcoin, provided that those strategies impose no incremental costs on American taxpayers,” the order said.

Nor will the U.S. sell bitcoin deposited into the reserve, according to the order.

Stefan von Haenisch, director of over-the-counter trading in the Asia-Pacific region for the crypto custody firm Bitgo Inc., said the potential lack of new buying was weighing on the market.

“Previously, investors were jumping into the market in anticipation of the government buying bitcoin,” he said. “With this latest development, these positions are being unwound.”

The stipulations around the nonbitcoin stockpile were even more stringent.

According to the order, the government would not acquire additional crypto assets for the stockpile “beyond those obtained through forfeiture proceedings.”

Washington crypto gathering

And unlike the requirement not to sell any bitcoin, the order explicitly noted that the Treasury “may determine strategies for responsible stewardship, including potential sales” from the stockpile.

The U.S. currently owns about $16.4 billion worth of Bitcoin and about $400 million worth of seven other tokens, largely attributable to asset forfeitures related to civil and criminal cases.

The order comes just ahead of a gathering of crypto executives in Washington. Some two dozen representatives of companies including Coinbase Global Inc. and Robinhood Markets Inc. are heading to the White House to meet with Trump and Sacks.

“The significance of this executive order is mainly symbolic, as it marks the first time bitcoin is formally recognized as a reserve asset of the United States government,” said Andrew O’Neill, managing director of digital assets at S&P Global Ratings.

Diverging fortunes

Trump’s campaign pledge to create a strategic bitcoin reserve was one of many promises designed to appeal to an industry that has emerged as source of significant political donations.

That pledge — in addition to his promise to fire Gary Gensler from his then-role as the chair of the U.S. Securities and Exchange Commission — helped fuel a run-up in token prices leading up to his inauguration.

But sentiment in the market turned negative in February as investors reacted to news about tariffs, a $1.5 billion crypto hack and outflows from digital-asset ETFs.

Then, Trump sparked an intense but short-lived rally over the weekend when he said on Truth Social that solana (SOL), cardano (ADA) and XRP would be included in the government’s plans alongside bitcoin and ether.

Bitcoin proponents reacted with dismay to the social media announcement at the time, criticizing the merits of the other, less established tokens.

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