Cryptocurrency Drops Up to 6% as Lack of Government Purchase Plans Disappoints Investors
Bitcoin’s value fell sharply following an executive order by U.S. President Donald Trump to establish a “Strategic Bitcoin Reserve” and a stockpile of other digital assets. The announcement, which did not include plans for the government to actively purchase Bitcoin, failed to impress crypto markets, leading to a drop of up to 6% in Bitcoin’s price.
After the executive order was issued on Thursday, Bitcoin’s value initially dropped to $84,900 before recovering slightly to around $87,700 by 05:00 GMT.
David Sacks, Trump’s crypto advisor, explained in a statement that the “Strategic Bitcoin Reserve” and “Digital Asset Stockpile” would be funded using assets forfeited in criminal or civil proceedings, ensuring no cost to taxpayers. “This means it will not cost taxpayers a dime,” Sacks stated on X (formerly Twitter).
He added, “It is estimated that the U.S. government owns about 200,000 Bitcoin; however, there has never been a complete audit. The executive order directs a full accounting of the federal government’s digital asset holdings.”
Sacks also noted that the order tasked the Secretaries of Treasury and Commerce with developing “budget-neutral strategies for acquiring additional Bitcoin,” provided these acquisitions do not burden U.S. taxpayers.
Trump’s executive order follows his repeated promises to establish a cryptocurrency stockpile or reserve as part of his broader goal to make the U.S. the “crypto capital of the planet.”
However, the lack of immediate plans for government purchases of Bitcoin disappointed some in the crypto community. Shayan Salehi, a German tech entrepreneur, remarked that the announcement was “famous words that can unleash a bear market.”
Spencer Hakimian, founder of New York-based Tolou Capital Management, called the plan “very underwhelming,” stating, “They will not currently buy any new Bitcoin unless they can do it in a revenue-neutral way. Nothing the federal government does is revenue neutral.”
The U.S. government currently owns an estimated 200,000 Bitcoin, most of which was seized during criminal and civil forfeiture cases. Sacks likened the proposed reserve to a “digital Fort Knox,” emphasizing its role in preserving Bitcoin’s value. “Premature sales of Bitcoin have already cost U.S. taxpayers over $17 billion in lost value. Now the federal government will have a strategy to maximize the value of its holdings,” he said.
In addition to the Bitcoin reserve, a separate stockpile would be created for “digital assets other than Bitcoin forfeited in criminal or civil proceedings.” This could include tokens such as Ether, XRP, Solana, and Cardano—assets Trump named in a social media post earlier this week outlining his cryptocurrency plans.
Bitcoin’s value surged after Trump’s election in November, reaching a record high of $109,071 in mid-January. However, his support for cryptocurrency has drawn scrutiny, particularly since his family has reportedly accumulated billions in crypto wealth, including through a Trump-themed meme coin launched in January.
Critics of Bitcoin and other cryptocurrencies have warned that these assets lack intrinsic value and likened their rise to a Ponzi scheme.
The market’s muted response to Trump’s latest move highlights the crypto community’s cautious optimism and the challenges of aligning government policy with volatile digital asset markets.
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