When US President Donald Trump announced a Strategic Bitcoin Reserve the price of Bitcoin (BTC) dropped by about 6%, which shocked the cryptocurrency market. People in the market had hoped for a government-backed plan to buy Bitcoin. Instead, the reserve will only hold Bitcoin, which the government already has from criminal cases. The lack of fresh buying power led to a sell-off, disappointing investors and bringing down other prominent cryptocurrencies.
Bitcoin Price Drops
CoinMarketCap data shows that Bitcoin’s price dropped from $90,400 to $84,979 just hours after the news came out. There wasn’t enough information to reassure investors that the reserve could handle its funds other than seized Bitcoin. An expert in cryptocurrencies, The Kobeissi Letter, said there was “no explanation on how the reserve will be funded aside from Bitcoin that the US already holds.”
It wasn’t just Bitcoin that went down. After hearing that the US Digital Asset Stockpile would only hold digital assets obtained through forfeiture procedures, Ether (ETH) fell 4%, XRP fell 7%, Solana (SOL) fell 5.14%, and Cardano (ADA) fell 9.19%.
Market sentiment: Sell-Off or Misstep?
Even though the price decreased, some experts think the market’s response was not logical. Avichal, CEO of Electric Capital, asked on X, “Who the hell sells the news of a US Strategic Bitcoin Reserve?!” about the sell-off. Ash Crypto, a well-known crypto trader, said this isn’t a typical case of “buy the rumor, sell the news.” He predicted that Bitcoin would rise above $250,000 as other countries did the same.
Dennis Porter, CEO of Satoshi Action Fund, said that the government might still buy more Bitcoin. This gave buyers hope that the move would lead to more institutions using digital assets.
The Big Picture
The market reacted negatively at first, but creating a Strategic Bitcoin Reserve was a turning point in Bitcoin’s acceptance by most people. A small role for the government for now, but it sets a standard for future use of digital assets. As countries worldwide investigate similar plans, Bitcoin’s long-term trend may stay upward, even if it changes quickly.
Conclusion
The market may have bought the news today, but more and more people worldwide are becoming interested in Bitcoin reserves. This could be the start of a new era for using cryptocurrencies.
