The price of Bitcoin (BTC-USD) continues to decline, despite President Donald Trump’s attempts to align with the crypto community by proposing a strategic bitcoin reserve. This initiative was highlighted during a recent meeting with crypto executives at the White House. Bitcoin plummeted below $78,000 on Monday, marking its lowest point since shortly after Trump’s election victory last November. Currently, it has dropped 28% from its peak of over $109,000, which was reached on the day of Trump’s inauguration in January. Other cryptocurrencies, such as Ethereum (ETH) and XRP (XRP), also saw declines on the same day. Coinbase (COIN), a leading cryptocurrency exchange, experienced an 18% drop in its stock price during Monday afternoon trading.
### Market Reaction to Trump’s Stance
Following Trump’s election, his supportive stance towards cryptocurrencies initially boosted digital asset prices, fueling optimism for a more favorable regulatory environment in Washington, D.C. However, this optimism has waned, unable to counteract recent economic uncertainties, including growing concerns surrounding the U.S. economy and Trump’s unpredictable trade policies. Jeff Dorman, the chief investment officer at crypto asset manager Arca, noted in a Monday update that while the early stages of the crypto sell-off in January and February were not influenced by broader global economic factors, the recent downturn has been directly linked to volatility in equity markets.
### Disappointment Over Bitcoin Reserve Announcement
There has been a palpable sense of disappointment in the crypto sector regarding Trump’s bitcoin reserve proposal. Many had anticipated that the administration would commit to purchasing additional digital assets, rather than merely utilizing existing crypto obtained through legal seizures. Haider Rafique, chief marketing officer for crypto exchange OKX, expressed that while he views the reserve as a significant step that solidifies bitcoin’s global legitimacy, it is unlikely to generate immediate demand for the cryptocurrency, leaving many expecting a more aggressive accumulation by the government feeling let down.
### Price Volatility and Strategic Reserve
Monday’s decline illustrates the dramatic price fluctuations Bitcoin has faced recently, particularly after experiencing its most significant correction since the downturn in 2022. Martin Leinweber from MarketVector remarked that cryptocurrencies remain high-risk assets that require increased liquidity. The strategic reserve proposed by Trump is seen as one of his key commitments to the crypto community, a promise he made during his campaign to position the U.S. as the leading hub for cryptocurrency.
### Government Holdings and Future Acquisitions
According to Trump’s crypto advisor David Sacks, the U.S. government currently holds an estimated 200,000 bitcoins, valued at over $17 billion, after liquidating about half of its assets obtained through criminal seizures. Sacks stated that had the government retained all its bitcoin instead of selling roughly $360 million worth over the past decade, its holdings could be worth an additional $17 billion. He assured that once included in the reserve, these bitcoins would not be sold and would serve as a store of value, likening the reserve to a digital version of Fort Knox.
### Future of the Reserve and Global Implications
An unresolved question about the newly announced reserve is whether it will lead to the acquisition of more bitcoins beyond the current government holdings. Sacks mentioned that the Treasury and Commerce secretaries have been authorized to devise budget-neutral strategies for acquiring additional bitcoins, as long as these strategies do not impose costs on U.S. taxpayers. Treasury Secretary Scott Bessent indicated that initially, seized crypto assets would populate the reserve, with future acquisitions to be determined. Sacks clarified that the government would not seek to acquire any new assets outside of those obtained through forfeiture.
Coinbase CEO Brian Armstrong remarked that the U.S. government’s role as a bitcoin holder could position it as a potential buyer, suggesting that this move might influence other G20 nations to view bitcoin as a modern alternative to the gold standard. Armstrong noted that Trump’s renewed support has rekindled interest in the cryptocurrency sector.
